Eric Rucker Interview

We'll adjust it as we go. I have to admit that, um, while state treasurer is not as you mentioned one of those high profile positions as a result people are sometimes unfamiliar with the duties of what a state treasurer does. Maybe you could go over those for us i think the public perception of the state treasurer's office is that they are the keeper of the public purse the state community chest if you will and they are the individual's most primarily concerned with the investments of state monies. Obviously the taxes that are raised in the state of Kansas go to the department of revenue and then they are wire transferred across to the state treasury for immediate investment. Now the fact of the matter is we've talked about public perception but the fact of the matter is that while the state treasurer is sit as chairman of what they call the pooled money investment board that makes the investment decisions the state treasurer is not in control of that board but only

one of three members of the other two members are in fact appointees by the governor that though though still is the principal duty of the state treasurer's office that and keeping track of lost property and making absolutely certain that those individuals who are the recipients of lost property are properly notified there is in fact a fiscal agency a subdivision of the state treasurer's office and that is most known for the following function when local units of government whether it's a city or a county or a school district decides that they're going to have a bond issuance and they're going to make payments obviously on those bonds that in many instances those localities make their payments to the state treasurer's office in the state treasurer in turn writes a check to the individuals holding the bones. Now that's a service provided by the state treasurer's office some states do that some states do not. Those are the principal functions of the state treasurer.

When I look it up in the dictionary it says that the treasury is in charge of taxation, revenue, and public finances. That is not the case in the state of Kansas the state treasurer has nothing to do with the actual tax collection. We had a department of revenue that makes absolutely certain that a periodically individual citizens are notified that they owe x number of dollars in tax whether that's individual income or whether or not that is business of corporate tax. Coming out of the wake of- and actually still in the wake of reappraisal and classification I would imagine that would be something that you would be more than happy to. I'm glad everyday that I'm not a member of the legislature Kim. But i guess what i would say is that while there will probably never be a time in the state of Kansas where the interest earned on the state revenues will substantially impact the amount of taxes owed by Kansans nonetheless it's incumbent upon the state treasurer to attempt to maximize

the amount of interest on those hundreds of millions of dollars of idle funds sitting there so that no more taxes are necessary then- then absolutely necessary. We went through a period when i first came to Kansas two years ago they were looking at a windfall and how to spend it and a year later we're- taxes have been raised as a as a result of reappraisal. Actually reappraisal and classification but. The classification reappraisal process was actually supposed to be cont- [Audio Malfunction] That's alright. classification of reappraisal was actually an attempt to be content neutral as far as the total dollars raised in taxes but what happened was absolutely massive shifts within the total body

of taxation. Let me give you an example, if in fact a company had inventory and it was a major company lets say a company like a good year or beef packing industry. All of that inventory that they would have would be taken off the tax rolls and it had to be placed someplace because school districts counties and cities were not lowering their budgets and as a result of not lowering the need for taxes if a individual taxes if that individuals taxes and tax payer aides went down and taxpayers b though z it may very well go up particularly at their own residence is because that inventory going off meant that residences picked the increase up so while there wasn't an increase in the total dollar amount intended to be raised a good percentage of Kansans got an increase as a result of proper evaluation and reappraisal because of the way the law was written. I

know that as you mentioned that the office- the treasury state treasury doesn't law, the legislatures that but do you have any thoughts of how we can get ourselves out of this out of this mess. Well I guess looking back it's easy to second guess the legislature I think two points need to be made and would be of importance i think to your listening audience. Number one looking back it becomes glaringly apparent now that we are the only state in the history of the united states to ever do proper evaluation and reprisal the way we did it. In other words to come up with the actual percentages and the exemptions that we were going to place on property and then we went out and appraised property usually it's done the other way you make your appraisal first you determine what the new values on property are and then you have a public battle royal in the halls of the legislature and that's exactly what the legislatures for, is public

battle for oil where competing interests come together and determine what the rate of taxation is going to be they quote unquote lobby their legislators and the legislatures charged made good solid public policy what in fact happened in Kansas was that there was an attempt to make policy before they knew what the answer actually was then secondly it's extremely important for the public to understand that in many instances across the united states there was a phase in of those taxation rates and in Kansas they did it in one year and those massive shifts-[Kim] Like cold turkey.[Eric] Absolutely Kim. Caused- caused extreme displacement and disenfranchised and the- and the general populace and what the what the political up shot will be were all waiting for the august and November elections to tell us. I'm only happy that that i had no part to play in that directly because I obviously wasn't in the legislature but indirectly in the sense of being a county commissioner in a major metropolitan

area that- that quite frankly had some of those massive shifts going on. What skills would you bring to the position of state treasury. Sure I think the two major job qualifications of an individual should have if they determined to run for state *stuttering*Let me back up. Glad were doing this on tape. I think the two major qualifications than an individual should possess if you're going to run for state treasurer. Number one: job administrative experience. I was deputy assistant secretary of state for the state of Kansas. I had a staff I had a budget i was executive director of the Kansas republican party for several years again we have a staff we have a budget I've been a county commissioner since nineteen eighty seven and I've had combined budgetary experience of over a hundred and seventy five million dollars

this is particularly significant when you think that Shawnee county the county in which I am a county commissioners is the only metropolitan county and city Kansas that does not have a full time county administrator. As a result of that the county commissioners are directly responsible for budgetary oversight and money management and in the three years that we've controlled money management the interest on the idol funds have increased substantially in excess of a hundred and forty percent and the fact is is that we were doing the job in Shawnee county prior to nineteen eighty seven that we should have been doing in the area of money management and the interest garnered on public funds it is those experiences that I like to take to the state treasurer's office so the two major things is proven administration and money management experience. And why do you want to be the treasure of Kansas what personally. Sure well i think that the benefit of course you hope to provide of public and it's just then a debate and that's what a lot of elections are about who it is the best

is the best individual to provide that public service i just personally think that the state treasurer's office has been appropriately handled in the last fifteen years or so but not dynamically handled and by that i mean the state treasurer's office can be a much more vibrant position and much more in the public eye and the public can be much more informed about the state treasurer's office and that's why i propose taking a more aggressive role in the pool money investment board and by that i mean at the present time as I've indicated earlier the governor controls the pool my investment board the governor would not if i were to be successful in one proposal that i would make in the nineteen ninety one legislative session that is that the county pardon me that the state treasurer not only be the chairman of the pool on investment board but they also have one appointee the governor's office should be represented and their influence should be understood on that board they set public policies as well

and they could have an appointee as well but i still believe that in the public's mind the state treasurer's office is the office principal elected to manage monies and to be the chief spokesman for fiscal policy in the state of Kansas that's why i believe the state treasurer should control the board but i also believe that the state treasurer should be a member of the capers board which is the board which is presently involve in investment of retirement funds for state employees. I also believe that the state treasurer should be part of any Kansas housing authority that is hopeful in the offing that certainly is done in many other states so it's not an aberration or something out of the ordinary and it's something that should be done in Kansas. I've been done successfully in other states. How much money are we talking about in terms of the pooled money that you're speaking about that the governors office now controls and that you would like to assume under the state treasury. Again in an answering the question please understand that as an elected public

official these monies are managed on a day to day basis by the policies that are set by the board but the actual individuals executing that policy are professional money managers because were talking about vast sums of money and you want educated professional individuals actually making those hands on decisions the state treasurer's office has a total cash flow in any calendar year of approximately ten billion dollars and state investments of over one billion dollars. The pool money investment board made a recent decision lowering the amount of monies in an active accounts for subsequent investment in Kansas banks and they lowered the amount to two hundred- pardon me, forty four hundred and sixty million dollars. We will have overnights, just monies that are invested on one one night interest garner ration of an excess of two hundred two hundred and fifty million dollars. So we are talking about some significant sums of money

here and what is in the balance is the interest that can be garnered from those funds which subsequently can be applied to what the state's needs are and that has a propensity to lower taxes. Not significantly but nonetheless lower taxes. So you're thinking that if we if we took advantage of some of this money and made a little bit more innovative investment in certain innovative investment directions that actually more money could be gotten out of this. That is exactly what I'm saying Kim but- but please understand that at the same time Kansas has been appropriately conservative in the investment of public funds and you need not look any further than New York city when they feared possible bankruptcy to understand how wise that conservative approach was and I advocate that conservative approach because certain states, certain cities, certain school

districts, certain counties have experienced market vulnerability because they're parameters were not drawn tight enough and i believe that the financial community would agree with me when i say that the investment environment right now is way too cloudy to get real bold in innovation but i think that we can maximize interest with the present laws that we have now by fine tuning. With regard to the failed S&Ls in the like how can that be avoided how can we ensure financial help at the state level but at the same time being adventurous and bold enough to take advantage of some of the things that are going on it for example the Mr. Greenspan just lowered the interest rates so that's gonna free up a lot of money. That's right it will invigorate the economy to a certain degree and certainly will invigorate the housing market one need not be a financial genius to understand that when

interest rates go down individuals become more much more interested in the housing market. In an era when we're faced with frequent financial disclosures made by what we're at one time solid financial institutions indicating their insolvency should be of a concern to an average Kansan. It should be of concern first of all because it's it's no longer a debatable issue whether or not and individuals are going to be paying more in federal taxes the issue is how much more an individual that once believed in a massive peace dividend as a result of a restructuring of communist nations are now saying that peace dividend eroded significantly because of the SNL mismanagement and outright fraud and greed involved in that industry again it should concern Kansans too as they look at the state treasurer's office because you can be innovative within the parameters set out by state statute but you

cannot be reckless. The end goal if you will for every state treasurer is to maximize the amount of interest on public funds but to do it in such a way that you are unequivocally safe and secure now as hot as proper evaluation reappraisal has been you start losing [inaudible]