Guest Opinions

Could Idaho treasurer have saved $$ on tax notes? Yes, he says — but at a risk.

Ron Crane on state borrowing

Idaho's State Treasurer answers criticism from a governor-appointed investment adviser on why a $500 million debt financing costs the state, and taxpayers, so much in fees and interest.
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Idaho's State Treasurer answers criticism from a governor-appointed investment adviser on why a $500 million debt financing costs the state, and taxpayers, so much in fees and interest.

Each year, for the last 19 years in my role as treasurer, I’ve overseen the issuance of billions of dollars of Tax Anticipation Notes (TANs). These are the short-term notes states and municipalities nationwide use to pay bills and obligations due early in the fiscal year, before tax revenue accumulates in general fund accounts. In Idaho, TAN proceeds are essential to helping schools pay bills and salaries early in the school year.

Overseeing the TAN process is a critical function of my office and one I take seriously. I am proud of the fact that in the last 19 years, this process has unfolded smoothly and glitch-free. Idaho taxpayers have never suffered losses or been at risk financially by any problems or pitfalls that could be associated with this highly regulated process.

It has been reported that Idaho could have saved money by exploring other means of issuing TANs, specifically by paying lower rates and fees to the underwriters and financial advisers who play a crucial role in these transactions.

As a lifelong Republican and fiscal conservative, I don’t easily dismiss thrift and savings.

I also believe in being a smart investor, managing risk and surrounding myself with trusted experts.

Critics have suggested my office is overpaying for the financial advice and guidance it gets when it issues $500 million worth of TANs. Could I have paid less? Of course. This is America and cheaper goods and services are always available to anyone who places cost above other priorities.

But results matter more in this case. One of the reasons Idaho’s TANs have been so successful for nearly two decades is the trusted team I’ve assembled to handle this transaction. These experts understand the market, Idaho’s needs and have developed a proven, finely tuned process to execute these high-dollar deals seamlessly year after year.

Let’s put this in another perspective. Say, for example, you and your spouse are approached by a financial adviser offering the same retirement planning service but at a cheaper rate with fewer fees than the adviser you’ve spent years developing a relationship built on trust and confidence. At first, this alternative sounds appealing.

The ultimate question is whether the lower price outweighs the value of the trust developed with your current adviser, his/her past performance and the risk of putting your nest egg in the hands of someone you don’t know.

With Idaho’s TANs, I’ve opted to put trust before risk, certainty over the unknown. I’ve stated publicly that I’m open to considering alternative TAN strategies, but I’m also proud of our track record.

It’s also been reported that I’m unwilling to allow two advisory boards to review my office’s TAN process. This is simply not true.

In fact, the Treasurer’s Investment Advisory Board recently had an opportunity to explore TAN policy when board member Cameron Arial proposed a motion to review the policy.

The motion by Arial, who has been an outspoken critic of the TAN policy in this newspaper, died for lack of a second.

I’m proud of the office’s TAN performance, just as I am with the state’s sterling credit rating and programs created under my tenure, such as the Idaho School Bond Guaranty Program and the Idaho Bond Bank Authority. For more than a decade, these programs have saved millions of dollars for taxpayers and communities across the state.

It is no secret I’m retiring as treasurer at the end of next year and leaving the door open for the next person to lead this office.

With that in mind, if Mr. Arial has better ideas for how to do this job, I encourage him to run for the office.

Ron Crane is the treasurer of Idaho.

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