State treasurer takes the long-term view

MOSES LAKE — It’s one of the most important offices no one has ever heard of.

That’s how Washington State Treasurer Mike Pellicciotti describes the office he was elected to last fall. As the state’s banker, he said it’s his job to make sure there’s enough money available to meet all of the state’s obligations.

“We have three main areas we manage in the office. Investments, we manage debt, then we do general operations, cash flow checks,” Pellicciotti said during a half-hour long conversation with the Columbia Basin Herald in Moses Lake on Friday.

“If any money is coming in or out of the state, it’s going through our office. County treasurers collect it, we get it from them, and then we pay bills,” he said.

Pellicciotti, who stopped by Moses Lake on a trip to visit with family in Spokane, said he tries to make it a habit to speak with local media whenever he can.

Pellicciotti, a former two-term member of the state House of Representatives and state prosecutor, said around $360 billion moves in and out of the treasury in a typical year. And that’s in addition to $20 billion in state debt and an investment portfolio of around $150 billion, primarily to meet long-term obligations like state pensions and workers compensation payments.

It has been a particularly tough job given the COVID-19 recession was projected in mid-2020 to reduce state tax revenue by nearly $9 billion between 2020 and 2022 — $4.5 billion in 2020 alone.

“When I came into office (in January 2021), there was an economic recession and also a $6 billion hole in the budget,” he said.

It’s one reason Pellicciotti said he focused so hard, along with several other state treasurers, to prompt Congress to pass the American Rescue Plan Act in March, which in addition to direct payments made to Washington residents, also provided $7 billion in federal aid to the state and to local governments.

“A lot of the focus I’ve had in the last several months is coming into an economic recession and trying to navigate and do the things we need to do to get through that,” he said.

Because of that aid, Pellicciotti said the state has been able to balance its books, maintain its “AAA” credit rating, and can even begin to look at how equitable the economic recovery is, and broadly it’s being shared.

According to a Washington State Economic and Revenue Forecast Council forecast released in late June, the tax revenues are expected to be $2.5 billion more than initially expected for 2021-2023. The forecast cited stronger than expected economic growth as the state recovers from the pandemic-related closures.

Among the things Pellicciotti said he’s done is refinanced much of the state’s debt, leveraging that credit rating to secure lower interest rates and save the state $120 million over the next few years — money the legislature can now put toward other things, such as support for small business, rural investment and affordable housing.

“We’re using that financial solvency to make money available to different programs,” he said.

Pellicciotti also said the position gives him some freedom to take a longer-term view, to think about about things might look like in 25 or 50 years and what kind of plans the state might need to make, whether it’s overseeing its investment pool, promoting investment in housing, or thinking about how state pensions are funded and even how to help workers who don’t have proper pensions of their own.

“I knew the work was going to be interesting, I like it more than I thought I would, and I knew I would like it a lot. It’s been incredibly satisfying,” he said.

“As state treasurer, you can be thinking longer term in a way that really can make a difference,” Pellicciotti added.