Las Vegas Sun

September 21, 2019

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Kate Marshall campaigns on performance as state treasurer

Kate Marshall

Kate Marshall

To hear state Treasurer Kate Marshall tell it on the special election campaign trail, she has used her relatively obscure office as the holder of the state’s purse strings to shepherd Nevada through an economic crisis unlike any other in history.

“I have taken the state through this fiscal crisis, steered it with a steady hand,” she told “Face to Face” host Jon Ralston recently. “I made money every single quarter. I actually made money for this state.”

As she makes a difficult congressional bid as a Democrat in a heavily Republican district where the GOP's Mark Amodei is running, Marshall wants voters to focus on her performance as state treasurer.

Marshall has been an aggressive treasurer. She has helped lawmakers struggling with a budget hole to find cash in various state accounts. She has instituted policies to increase the unclaimed property funds flowing to the state. And she made investment decisions that, overall, protected Nevada’s general fund portfolio through the meltdown of the financial industry three years ago.

Now she is working to make the case that despite fairly tight constraints on the powers of the state treasurer, her decisions helped keep the state on a strong financial footing.

While the treasurer has some authority to decide how the state invests its money, the office has no say on how the state generates or spends its money — decisions that traditionally receive the credit or blame for the state’s financial health.

Nor does the state treasurer traditionally affect the economic and financial policies of the state.

“Precious little, to tell you the truth,” former state Treasurer Bob Seale, a Republican, said when asked how much power the treasurer has on state policy. “The treasurer takes the revenue that comes in and properly invests it. Beyond that, there’s not much they can do.”

The state treasurer is one of six statewide constitutional offices. To win it proves a candidate has the chops to mount a successful statewide campaign.

But once in office, the policy authority is mostly limited to investing the cash in the state’s general fund, running the unclaimed property program and managing several college tuition and savings programs.

Several treasurers have attempted to use the office as a stepping stone to higher office. None have succeeded. Two past treasurers ran for governor and lost — ironically, both of them lost to former Gov. Dick Bryan.

It’s hard to argue that former Treasurer Brian Krolicki won higher office when he was elected lieutenant governor, an office that some have argued should be eliminated entirely. (Krolicki had intended to run for U.S. Senate last year but was too busy fighting a felony indictment stemming from his time as treasurer from which he was eventually exonerated.)

Seale served a single term in the Assembly, which is not a statewide seat, after his two terms as treasurer.

“The question is whether Kate can do something that essentially hasn’t been done before,” former state archivist Guy Rocha said of her effort to launch herself into higher office from her position as treasurer. “It’s not a sexy state office. The one office I would say is less sexy is controller.”

Marshall has been known as a politically ambitious candidate and has run the treasurer’s office as such, putting herself at the forefront of several policy fights in the Legislature and touting her accomplishments at regular political gatherings for the past five years.

Technically, Marshall is correct when she says she has earned the state money. But the bureaucracy the state has put in place to protect the state’s general fund makes it relatively difficult to lose money.

The office has a storied history. Nevada’s first treasurer died of a drug overdose, leading authorities to discover he had been stealing money from the state’s permanent school fund. In the 1920s, the treasurer conspired with the controller to embezzle from the state.

Those problems have led the state to create a bureaucracy of safeguards that not only protect Nevada from a malfeasant elected official but also limits what a competent one can do.

“I changed the law a couple of times to allow new things to be done and I can tell you it was not easy to accomplish those changes,” Seale said of his work to convince lawmakers to give the treasurer more leeway on how to invest the state’s money.

Still, the treasurer does have some autonomy to make investment decisions within the policy boundaries set by state law and the Nevada Board of Finance. The treasurer also is instrumental in maintaining the state’s credit rating, which hasn’t suffered under Marshall’s tenure.

Marshall argues the financial crisis that wrought financial ruin on investment portfolios nationwide was an unprecedented test of the Nevada state treasurer.

“A lot of what I’ve done has been first, because in this fiscal crisis, we were met with a lot of firsts,” she said. “My decisions themselves — my decisions — saved this state millions of dollars. Millions of dollars.”

Since she took office, Marshall’s portfolio decisions have generated interest — a total of $87 million above the benchmark — for each quarter she has been in office.

With the current debt crisis gripping the nation’s attention, the conditions could be ripe for Marshall to argue her position as treasurer has prepared her for Congress.

“She has a slight wedge there to say this is what I do. I take care of the credit of the state of Nevada,” said political scientist Eric Herzik. “If this election were about the war in Iraq and Afghanistan, the treasurer’s office doesn’t give you anything. But given the focus right now is so much on debt and financing, it’s a modest boost.”

But Marshall’s record on investing isn’t without its blemishes. Republicans repeatedly point to the $50 million in lent securities that Nevada essentially lost when Lehman Brothers collapsed.

Marshall argues the unprecedented collapse of one of the world’s largest investment banks wasn’t anticipated by anyone in the market. She acted quickly to notify legislative leaders, and the governor and took measures to help mitigate the loss — actions that have so far cut that potential loss in half. The bankruptcy court will ultimately decide how much Nevada can recoup from the defaulted contract.

Ironically, however, the fact that Marshall even had the option to engage in securities lending as an investment practice for the state is because of the law Seale moved through the Legislature.

Asked if he could be the one held responsible for the state’s risk in the securities lending venture, Seale answered, “Well, you know, I guess I could be.

“I made some substantial amounts of money at it,” he said. “But you almost always have to have some sort of backup security in those environs. Somehow or other that didn’t get perfected.”

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