The last time anyone saw former Kentucky state treasurer James “Honest Dick” Tate, he was carrying two sacks of gold and silver coins from the treasurer’s office on March 14, 1888. No one saw him again.
Tate’s corruption prompted lawmakers to put term limits on state officials in 1891 when drafting the current state constitution, according to the Kentucky Encyclopedia.
Now, 123 years after Kentucky’s constitution was drafted, a Northern Kentucky lawmaker will try to amend the constitution to eliminate the office of treasurer altogether.
This time there are no allegations of corruption. It’s just a matter of saving money, said Sen. Chris McDaniel, R-Taylor Mill, who sponsored Senate Bill 58. McDaniel estimates the state could save up to $3 million a year out of the state’s $19 billion budget.
Speaker of the House Greg Stumbo, D-Prestonsburg, agrees the office should be eliminated and said McDaniel’s bill will stand a chance in the House. “All the treasurer does really is sign the paychecks, and I think most of that is done electronically these days,” he said.
The treasurer is one of seven constitutional offices along with governor, lieutenant governor, attorney general, auditor, secretary of state and commissioner of agriculture. Eliminating it would require amending the state constitution, and so, if McDaniel’s bill is passed by the General Assembly, it would require voter approval in November.
Kentucky voters last eliminated a constitutional office in 2000 when they voted to eliminate the office of railroad commissioner.
McDaniel said the finance cabinet in the executive branch could perform most of the treasurer’s duties.
“In a year where one of the big bywords is ‘We don’t have enough money,’ well, there are places in government where we can find inefficiency,” McDaniel said. “Where we can find inefficiency, well we ought to be doing that.”
The current treasurer, Todd Hollenbach, a Democrat, defends his office. He disagrees that moving the treasurer’s duties would save money and said his office provides a valuable check to executive spending.
Hollenbach’s office has 30 employees and a $3.1 million budget in 2013. The treasurer earns an annual salary of $113,000. The office’s primary duties are to sign the state’s checks to pay for government operations, make record of all money paid to state agencies and return unclaimed property. Kentucky holds about $300 million worth of unclaimed property from 200,000 individuals. Unclaimed property includes funds in dormant bank accounts, abandoned safe deposit boxes, insurance proceeds, bonds never collected, utility deposits and tobacco settlement money.
“It is critical work,” Hollenbach said. “No other office, if you shut it down today, would bring state government to a halt. We handle the money. If the money stops flowing, state government stops operating.”
Hollenbach said it would cost the state more to expand the finance cabinet to handle the treasurer’s duties because those employees would likely command higher salaries in the executive branch than his employees.
The treasurer also can act as a check to the executive branch, he said. As an elected official, he can step in and stop the payment on checks on spending he sees as unauthorized. In a budget impasse, for example, his office would decide what government services get funded. If those duties were moved to the finance cabinet in the executive branch, it would eliminate an important check on government spending.
“I’m accountable to the people,” Hollenbach said. “Right now, people have the right to decide who’s treasurer. You’d be taking that right away from people to determine who oversees the important functions of the treasury.”
Hollenbach is serving his second term as treasurer. Term limits prevent him from running for a third term after his current one ends in 2015.
Another constitutional office, the auditor, could provide that same check on the executive branch, said Pendleton County resident Ken Moellman. Moellman ran for treasurer in 2011 as a Libertarian on the platform that he would eliminate the office. He received 4.6 percent of the vote.
“I personally don’t feel like it’s a necessary office at this point now that we have computers,” Moellman said. “In theory, all this could be computer-automated.”
To hear the leader of the Democratic-controlled House say he thinks the office is unnecessary encourages some who have campaigned for years to get rid of the Kentucky treasurer.
Senate Majority Leader Damon Thayer, R-Georgetown, has sponsored legislation in the past to eliminate the treasurer’s office only to see it die in the House. “I think it’s pretty difficult to suggest that office is providing much value to the taxpayer.”
While eliminating the treasurer would save only around a hundredth of 1 percent of the state’s $19 billion budget, it would be a sign, Moellman said, “that Frankfort is getting serious about cutting some waste.”
It’s been since the 1990s that a state has eliminated its treasurer, according to the National Conference of State Legislatures. In 1998, Florida voters passed an amendment that merged the office of treasurer and comptroller into one office of chief financial officer. In 1995, Texas voters abolished their treasurer and moved the duties to the state’s comptroller’s office.