Ted Simons: The state's finances have improved, but the economy still makes for challenges that can impact Arizona's cash flow. Here to talk about that and more is state treasurer Doug Ducey. Good to see you again. Thanks for joining us.
Doug Ducey: Thanks for having me.
Ted Simons: How is it going so far?
Doug Ducey: So far, so good. It certainly is a different world from the private sector, but being involved in state government, especially in the situation that we're in right now, not only statewide, but nationally has been exciting and challenge can.
Ted Simons: Let's talk about the situation we're in statewide. How are we doing?
Doug Ducey: As a state we're doing well. If you think about where we were a year ago, I was running on a platform our budget is broken, our finances are a mess and we need fresh energy and a business approach. I feel good about what we've been able to do. That budget is balanced, there's no tricks, there's no gimmicks, there's no new rollovers and there was no borrowing. That's different than other states. And the treasurer can't take all the credit for that, but you can't get that done without a responsible legislature and a strong governor. And very few other states did that. Actually balanced their budget.
Ted Simons: Critics of that balancing budget efforts are saying that costs have been pushed on to cities, on to counties, on to hospitals, on to a whole bunch of other folks, just in terms of balancing the state budget. Is that a viable argument?
Doug Ducey: The simple fact is, there just isn't any more money, and states don't print money, unlike the federal government. So the state had to tighten its belt. Just like every family and small businessman has had to tighten his belt since 2007, government was the last to do it and they were late to do it. Now state government's done it, so do counties and cities.
Ted Simons: Let's talk about some of the things you've had to deal with up to and including some of these state legislatures' actions, they tried to sweep the transit program and it sound like that quite cut the mustard. You have to make sure the money gets back to her it was originally.
Doug Ducey: I think is the of the game playing is going to be over, and this idea, even if you go to the treasurer's website, the first thing you'll see is the state's cash balance. And if you remember, the state treasurer is the state's banker and investment officer. We don't collect tax dollars, we don't spend tax dollars, we safeguard and invest them. We make money.
Ted Simons: Let's talk about what do you as far as the state money is concerned and how -- talk about Arizona's investment portfolio here. What are you concentrating on?
Doug Ducey: This is a difficult time certainly to invest and the first priority is always going to be safety. A dollar lost is not measured the same way as a dollar gained, so you want to protect the principle. And we've been very good at that in the treasurer's office. We manage about $10 billion depending on what happens in the market, over the course of a day. And we want to make sure that money is there to pay the teachers and firefighters, to fill the potholes, that we don't lose that money, and at the same time we earn interest earnings.
Ted Simons: Before you took office, did you have kind of a plan maybe a formula as far as investing the state's money now that you're in office, have those goalposts moved?
Doug Ducey: I think just because of the economy that we're in and what we're seeing in the markets with all the volatility, there is a premium on safety and preservation and capital. We want to do the right things for the permanent land endowment. This is something that will invest in perpetuity. It has a balance of $3.1 billion. As the state continues to sell state land those proceeds come in and that will be a very large endowment. That's one reason to be optimistic about the future of Arizona and Arizona's K-12 education.
Ted Simons: Talk about a moving target, talk to us about things that happened back in Washington. The debt ceiling debate. The idea of downgrading U.S. credit. Obviously a focus on D.C., but an impact on America and last I checked we were still part of Omar Al-Farouq, so it's got to impact us to a certain degree.
Doug Ducey: It does all impact Arizona. I really think Washington, DC could learn something from Arizona. If you look at what our state legislature did, we did balance that budget. We're spending less next year than we did the previous year. So this can be done. But when things like the debt ceiling happened and the debt is downgraded, that affects the state of Arizona and that can affect interest rates. It hasn't affected interest rates yet because the federal reserve is artificially pinning them down. But over the course of time I have a concern that interest rates will rise and that will hurt people and their borrowing and the purchasing of different things we need to do in terms of infrastructure for the state.
Ted Simons: How much does that change your plan something if you have that concern, how far ahead do you look, how far ahead to you plan?
Doug Ducey: We plan ahead in the endowment we want to think into perpetuity. You want an asset allocation that can navigate through the volatility. In the other part of our funds, which is daily operating cash, you want to make sure you can pay the state's bills. So you're dealing in very short-term interest that can't earn any money in this interest rate environment.
Ted Simons: As a businessman, getting into this government position, anything surprise you? Anything that didn't surprise new what are you seeing?
Doug Ducey: I think I would say I'm surprised by the state employees that I work with. I think they're incredibly competent, hard working, and their heart is in the right place. And they want to do a good job, so they'll rise to the level of expectation. And the other thing that has been surprising to me is, we were very workmanlike in Arizona in terms of what we ran on and what we did. And as state treasurer you get to meet other treasurers from other states and I'm really surprised that our neighbors like California and other places like Illinois are so incredibly irresponsible in how they handle their budget.
Ted Simons: That's the last question I want to ask you, during the campaign you talked a lot about trying to get jobs to Arizona. And some folks are wondering, treasurer can only do so much. Balance the books and that's a job in and of itself. Now that you're in office, can you see that being a more difficult thing for a treasurer to do in terms of basically saying, I helped get that company from Illinois, that company from California to Arizona?
Doug Ducey: Well, I think I would call it challenging, but not impossible. Arizona has grown as a state, and people really vote with their U-Haul and Ryder trucks and we've been beginning in that game. At the same time we have fewer public companies in the state of Arizona today than we did 10 years ago.
Ted Simons: Why is that?
Doug Ducey: That's an excellent question. I would say it's because we didn't have a strategy. We didn't have a plan to attract businesses and to retain the companies that we have here. I think what you're starting to see is the first step toward that type of strategy. We know what a great quality of life we enjoy, we know people are moving from other places and saying, I'm staying, we need to get those companies to do that, but you have to do that by building relationships. That's state leaders and business leaders standing shoulder to shoulder to bring these companies here.
Ted Simons: Thanks for joining us.
Doug Ducey: appreciate it.