Tag Archives: Beth Pearce

Signs of a Backroom Deal

Did Beth Pearce just hand the treasurer’s office to Michael Pieciak? Consider the timing.

April 27: Gov. Phil Scott’s office announces that Pieciak would step down as Commissioner of the Department of Financial Regulation in mid-May “to pursue other opportunities” of the unspecified variety.

May 4: Pearce announces she will not seek re-election as treasurer. Her decision, she said, was made after being diagnosed with cancer three weeks earlier. Or about two weeks before Pieciak’s departure from the administration.

May 6: Pieciak launches a campaign for treasurer as a Democrat. (He served under Republican Scott, but he was brought into state government by Dem Peter Shumlin.)

Here’s what it looks like: Pearce realizes she’s stepping down and essentially handpicks Pieciak as her successor. How could you look at the sequence of events and think otherwise?

Pearce took a couple weeks after her diagnosis, more than enough time to drop a word to Pieciak. He steps down as commissioner “to pursue other opportunities” only a week before Pearce’s surprise announcement. And he launches his candidacy only two days after Pearce’s announcement.

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The Unlikeliest Superhero

When Jeb Spaulding became newly-elected governor Peter Shumlin’s top cabinet official in January 2011, his little-known deputy was chosen to serve out the remainder of his term.

That deputy went on to become, arguably, the most popular officeholder in the Vermont Democratic Party. She routinely got loud, sustained ovations at VDP gatherings, and was at the top of many Democrats’ wish lists as a candidate for governor. But she had no interest in being anything other than Treasurer.

And now Beth Pearce has announced her retirement as Treasurer at the end of her term, when she will have served 12 years in the office.

First and foremost, all the luck in the world to Pearce as she battles cancer. Having watched Pearce in action, I have to say cancer has no idea what it’s in for.

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“Condos & Winters,” Eh?

There’s nothing new in Secretary of State Jim Condos penning an op-ed for Vermont news outlets. Does it all the time. But there’s something different with his latest: He lists deputy SoS Chris Winters as co-author. And earlier this month, Condos’ office announced the creation of an Elections “Myth vs. Fact” page on the Secretary’s website. Specifically, it announced that Condos and Winters had created the page.

This would be mere trivia except for one thing. The Democratic rumor mill is rife with word that Condos will not seek a seventh term in office, and that he will endorse Winters as his successor. In that context, it makes all the sense in the world for Condos to be elevating Winters to kinda-sorta coequal status in the public business of the office.

Condos’ endorsement would be a huge plus for the politically untested Winters, but it would be far from dispositive. There would be other entries in the race, possibly from two distinct spheres: (1) the technocrat class, with experience in running elections and such, and (2) Democratic politicos looking to climb the ladder. I don’t have specific names in either category besides Winters in Column A, but the opening would be a big fat juicy opportunity.

The statewide offices, generally speaking, are the best perch for those seeking to reach the highest levels of Vermont politics. They get your name before a statewide audience. They get voters accustomed to filling in the oval next to your name. (I was going to say “pulling the lever,” but I need provide no additional proof that I’m old.) A statewide post is a far better launchpad than any position in the Legislature, and I’m including Speaker and Pro Tem in that calculation. Most people, even most voters, just don’t pay much attention to the Statehouse.

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Why the Sudden Reticence, Madame Treasurer?

This kinda got lost in the wake of Speaker Jill Krowinski’s retreat on pension reform, but Treasurer Beth Pearce has taken a curious stand on fund management. She seems dead set against a legislative review of the pension funds’ track record.

Normally she’s a fiscal bloodhound, whenever shy about exploring any and all financial issues to the last decimal point and sounding the alarm when she sees fit. But not this one time.

As a reminder, the state treasurer occupies one of seven seats on the Vermont Pension Investment Committee, which makes the investment decisions.

I’d been wondering how the pensions underperformed badly during a historically long bull market. I mean, couldn’t a roomful of monkeys with Bloomberg terminals make money on Wall Street these days? Now, Seven Days’ Kevin McCallum has put numbers to my feeling.

Over the last decade, the S&P 500, a benchmark for the U.S. stock market, enjoyed an average annual return of 13.6 percent. Over that same period, Vermont’s public pension funds earned an average of just 7.2 percent a year from its investments.

That’s not an entirely fair comparison, as McCallum pointed out, since pension funds can’t take chances with their investments. But then he compared Vermont’s funds to other similarly sized public pension funds, and found that Vermont ranked 69th out of 100. Not exactly sterling.

Members of the House Government Operations Committee, who risked political suicide by exploring Krowinski’s reform plan, aren’t happy with the funds’ performance. Committee vice chair John Gannon, who has financial credentials to rival Pearce’s*, called the funds’ performance “horrendous.” Yikes.

*Eleven years at the Securities and Exchange Commission and several at the Financial Industry Regulatory Authority.

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So Many Sad Crocodiles

I tried to watch Tuesday’s kabuki performance hearing of the House Government Operations Committee, but was repeatedly thwarted by a bad Internet connection. (Thanks, Consolidated Communications!) Still, I saw enough to realize what was going on. And enough to be completely fed up with all the expressions of dismay from Democratic officeholders.

The short version: The fix is in. The skids are greased. Following two days of dog-and-pony public hearings, the committee picked up on Tuesday exactly where it left off on Friday afternoon: Charging ahead with a reform plan that will substantially devalue pensions for teachers and state employees.

So, thanks to all those who testified. For your time and trouble, you get a lovely parting gift: our Pension Reform Home Game. Now you can play God with other people’s pensions, just like our legislative leaders!

One thing every committee member can agree on (well, except the three Republicans, they don’t seem to mind at all) is that these are difficult, painful conversations. In the brief statement she read at the beginning of the second public hearing Monday, committee chair Sarah Copeland Hanzas used the word “difficult” three times. “These are really difficult conversations,” “Everyone has had a tremendously difficult year,” “this conversation couldn’t have come at a more difficult time.” In her testimony on Tuesday, Treasurer Beth Pearce said “When we gave our recommendations, we did so with a great deal of reluctance… these are painful.” Other Dems chimed in with similar expressions of saditude throughout Tuesday’s hearing.

Pardon me if I can’t appreciate the self-pity parade. These conversations are waaaaay less “difficult” for elected officials than for the folks who’ll take it in the shorts if this plan (or something like it) takes effect.

Here’s another thing that’s cratering my sympathy for our poor hard-working betters: They’re lying about where we are in the process.

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Special Delivery

Now, I’m not saying the House Democrats are ready to deliver a flaming bag of poo regarding public sector pensions. It’s just that all the signs point in that direction.The teachers’ and state employees’ unions should take care with any packages they find on the doorstep.

Because, apparently, the behind-closed-doors work has just about wrapped up. And suddenly, the House Government Operations Committee’s schedule is packed with pension-related hearings — leading up to the oft-promised public hearing on the as-yet-unreleased plan at the Traditional Newsdump Hour of Friday afternoon.

You know how rare it is for the Legislature to do anything substantive after 4:00 pm on a Friday? The only time it usually happens is during the last-ditch rush to adjournment.

And now, with a mere three days’ notice, the House Dems have scheduled a public hearing from 4:00 to 6:00 Friday. On a proposal that, as I might have already noted, hasn’t been made public as of this writing.

Friday’s dog-and-pony-show hearing will feature a parade of speakers who will each get three minutes to say their piece. Up to, presumably, the 120-minute time limit. That means, let me see, a total of 40 speaking slots. Forty! On an issue that touches the retirement security of thousands of Vermonters! You can register here; I suggest you do it fast.

It’s possible that the Dems have crafted a pension reform plan acceptable to all parties. But every sign points in the opposite direction. Secrecy? Check. Sudden effusion of hearings? Check. Little notice before a public hearing? Check. Public hearing scheduled for the Friday afternoon dead zone?

Check and double-check.

Did I mention there’s no actual bill yet? At least not one that’s publicly available.

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An Unsettling Incident in Senate Finance

Senate Finance Committee chair Ann Cummings is a mixed bag. She’s not the most imaginative or energetic policymaker; she barely bothers to campaign and waltzes to re-election every two years. She’s one of the many veteran senators with a very well-developed sense of entitlement.

On the other hand, she knows her stuff. That’s nothing to sneeze at when it comes to issues as complex as taxes and state revenue.

But that didn’t seem to be the case during a Thursday committee hearing. Quite the opposite; she was shockingly uninformed on one of the biggest financial issues facing state government in 2021. I couldn’t believe it at first, but then she did it again.

The subject was S.59, a bill introduced by Sen. Cheryl Hooker and four other senators. The bill is an attempt to address the glaring shortfalls in the state teachers’ and public employees’ pension funds — an issue brought to the forefront by Treasurer Beth Pearce this year. After having defended the funds throughout her tenure, she started ringing the alarm bell on funding shortfalls and advocating substantial changes.

The Dem-dominated Legislature now faces a choice between finding a big new pot of money for the funds, and imposing pain on two of the party’s most important constituencies. S.59 opts for the former; it would add a 3% income tax surcharge on Vermonters with incomes of $500,000 or more, and devote the revenue to filling the hole in the pension funds. Sen. Ruth Hardy, a member of Senate Finance and an S.59 co-sponsor, presented an initial look at the bill. It didn’t go well.

Pearce’s pivot has been the unexpected policy story of 2021 (so far). She’s been making the rounds of relevant legislative committees, laying out the problems and presenting lawmakers with the unpleasant policy choice described in the previous paragraph. On February 4, she offered her pension testimony to Senate Finance.

One week later, Cummings made it clear she didn’t have a clue about Pearce’s position or the status of the pension plans.

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Pearce Makes Her Case

Well, we didn’t get our first public face-off between State Treasurer Beth Pearce and the public sector unions on Thursday. But we did get a better sense of Pearce’s argument for cutting benefits in the face of growing unfunded liabilities in the state’s pension funds.

The Senate Government Operations Committee had set aside an hour and 45 minutes to hear from Pearce and the teachers’ and state employees’ unions. But Pearce’s presentation lasted almost an hour and a half. At that point, GovOps chair Jeanette White declared that there was “no time today to hear from the unions.” They’ll be back in the virtual witness chair as soon as next week.

That should be interesting. The unions haven’t exactly welcomed pension cuts in their public reactions, but they’d be well advised to come to the committee with some ideas of their own. Because the state of the pension funds — especially the teachers’ fund — is not good.

(Pearce’s PowerPoint presentation to the committee, and her full report on the state of the pensions, can be found on the GovOps website.)

And the unions ought to be prepared for this. According to Pearce, she’s been meeting with them “at least weekly since mid-December” to discuss what to do. She also held virtual town meetings with roughly 1,000 members of the Vermont-National Education Association and around 350 members of the Vermont State Employees Association. She told the committee she wanted the unions to be involved throughout the process.

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The Luckiest Man in Vermont

Gov. Phil Scott issued his budget address today (YouTube video here). It was an astoundingly pain-free occasion, considering that we’re in the throes of a pandemic that’s been holding our economy hostage for almost a year now. In fact, rather than proposing painful cuts, Scott offered a generous scattering of funds for a wide variety of programs that, he said, will put Vermont on a sounder footing going forward.

How? Simple. The tsunami of federal Covid relief money. Scott’s budget includes $210 million in one-time money from the feds. As we heard from state economists Tom Kavet and Jeffrey Carr last week, federal money has prevented an economic collapse and even contributed to a boom in some sectors.

Throughout his political career, Phil Scott has benefited from little-known and/or underfunded Democratic opposition in races for state senate, lieutenant governor and governor. In his six races for statewide office, the closest result was the 2010 contest for lieutenant governor — seven percentage points over Steve Howard. He gets credit for being an appealing political figure, but he sure hasn’t had to fight very hard.

And now, once again, he’s the luckiest man in Vermont. You’d think a shattering pandemic would lead to massive cutbacks, but no. Scott could once again boast of a budget that wouldn’t increase taxes or “existing fees.” And according to Kavet and Carr, the state economy will continue to be buoyed by federal infusions for the next two fiscal years. Which will make it a lot easier to craft a pain-free state budget again next year and, if he runs for a fourth term, he may well be unbeatable once again.

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Pearce’s Pivot

Still proud of her, @vtdemocrats?

At the end of last week, we got a sizeable Friday newsdump from an unusual source: State Treasurer Beth Pearce. In a report on the state’s public pension funds, she called for new limits on pensions for state employees and teachers. It was duly reported, first by VPR and then by VTDigger, but neither story captured the significance of Pearce’s pivot.

This is, in my view, the single biggest position shift by a top Democratic officeholder since Peter Shumlin abandoned single-payer health care in 2014. That move brought Shumlin’s political career to an ignoble conclusion, since he’d staked his governorship on delivering single-payer. I doubt that Pearce will have to slink off into the darkness, but she might not get the rapturous receptions at party functions that she’s gotten used to.

The pension plans don’t have enough funds to pay promised benefits because, through most of Howard Dean’s governorship and about half of Jim Douglas’, the state consistently shorted its annual contribution. Many have called for a shift from defined-benefit to a 401K-style defined-contribution plan. The former promises definite retirement benefits; the latter only promises to contribute money to the plan. Actual benefits depend on the health of the pension fund.

Pearce had been a champion of retaining defined-benefit. She’s an expert at public finance, so her view has carried a lot of weight. Now, she has abandoned that position. She still supports defined-benefit plans… but she has effectively changed her definition of the term. That’s a big, hairy deal. It puts legislative Democrats under pressure to go along with pension cuts — and that threatens to drive a wedge between the Vermont Democratic Party and two of its biggest supporters: the Vermont State Employees Association and the Vermont National Education Association.

I can’t say I blame her, given her recitation of the facts. But this could touch off a political shitstorm.

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