PHOENIX – Washington voters will have a stylistic contrast on their hands when they decide who will influence public investments and borrowing as state treasurer in an unconventional Republican vs. Republican race Nov. 8.
The race pits Benton County Treasurer Duane Davidson, who is well-known among the state's public finance community, against investment manager Michael Waite, who has not held elected office.
The winner will have influence over the state's financial philosophy, even if he does not have much explicit power to affect policy.
The current treasurer, Democrat James McIntire, has served since 2008, winning reelection in 2012. He chose not to run for a third term.
Washington's state government is one of the biggest issuers in the Far West, having sold $2.5 billion through the first half of 2016 according to Thomson Reuters.
The two Republicans are facing off because of Washington's primary election rules, which dictate that the top two vote getters advance to the general election regardless of party. Davidson led all five candidates in the Aug. 2 primary with 25% of the vote, while Waite claimed 23%. Three Democrats split their votes relatively evenly, setting up the contest between the two Republicans.
While the state constitution gives Washington's treasurer relatively narrow specific authority, he or she nonetheless has a significant platform from which to exert influence.
The office is responsible for issuing state debt, managing the state's cash flows, and investing the state's operating cash. The treasurer is a voting member of the State Investment Board, which manages the state's retirement plans for public employees.
McIntire, a Ph.D. economist who taught at the University of Washington and served in the state legislature prior to becoming treasurer, has tried to use his position to push for more far-reaching policy changes.
In July he proposed that the state, which doesn't have an income tax, adopt a 5% income tax to pay for K-12 education, and earlier this year spoke up as president of the National Association of State Treasurers in calling on the Internal Revenue Service to create a safe harbor for competitive sales of muni bonds in their issue price rules.
The Australian-born Waite, who came to the U.S. in the 1990s, told The Bond Buyer that while both he and Davidson are Republicans who oppose the idea of the state income tax, voters will be choosing between a hands-off administrator and career bureaucrat and an experienced private sector investor who plans to take an active role in influencing policy.
Waite is a senior vice president at Bentall Kennedy, a multi-national investment company with offices in Canada and Seattle, where he says he manages over $10.7 billion in assets.
"My opponent is a professional politician and bureaucrat," Waite said, adding that managing Benton County's approximately $300 million investment portfolio is not in his view similar to doing that job for the entire state.
Waite characterized his philosophy on debt issuance as "moderate," but said that he believes Washington's more than $20 billion debt load and $2 billion annual debt service obligation should be reduced and that one of his primary goals as Treasurer would be to engage the state legislature in a dialogue about what the appropriate debt level should be.
Under McIntire, the state conducted a debt affordability study that concluded that the debt burden was too high and which led to a constitutional debt limit amendment.
Waite acknowledged that low interest rates can make debt useful, but worried that the state has overused it.
"What is the appropriate debt? That conversation hasn't been had," Waite said.
"It's not one number, clearly. It's a range, or a band."
Waite said that if elected, he would use his financial expertise to help lawmakers understand the implications of borrowing and what alternatives exist. He has won the endorsement of a number of county and district Republican Party organizations as well as some current and former state lawmakers.
Davidson, who has been Benton County Treasurer since 2003, is well-known among the state's public finance community. While his campaign did not respond to a request for an interview or for more information about his debt philosophy, his endorsers include all of his fellow county treasurers as well as some of the state's major newspapers.
Davidson also advances the idea of cutting the state's debt load, pointing to a 50% reduction in Benton County's debt during his tenure. But in campaign discourse he has publicly taken a more hands-off stance than Waite when describing his philosophy on the Treasurer's place, telling The Seattle Times that the officeholder should be nonpartisan and not "jump into the legislative fray."
Hugh Spitzer, a longtime bond lawyer who now teaches at the University of Washington School of Law, described Davidson as an easy-to-like administrator who would not likely rock the boat as treasurer.
"Duane Davidson… he's a very middle of the road, good administrator. Well-known and liked among country treasurers and local finance officials," Spitzer said. "Duane is just not ideological at all."
Spitzer said that state treasurers have historically been cautious about debt issuance without having much of a policy role.
"The treasurer does not play a significant role in basic policy," Spitzer said. "They all tend to be cautious and conservative in terms of the amount of debt that the state incurs."
Former investment banker, policy advisor, and Port of Seattle Commissioner Alec Fisken, one of the Democrats defeated in the primary, also described Davidson as a straight shooter.
"Duane Davidson is pretty straightforward," Fisken said. What you see is what you get. He's a very likable guy, and that I think explains a good deal of his support."
Fisken said that while he agrees that the office of the Treasurer does not necessarily have much executive power, "it has some clout when the treasurer is able to assert him or herself."
Whichever man prevails will snap a long losing streak for Republicans seeking the office, as the GOP has not held the post since Charles Maybury served from 1953 to 1957.
