Campaign to make sure right decisions made for state’s future
Lucien Smith is an attorney at Balch & Bingham’s Jackson office and a Republican candidate for treasurer. A former budget advisor for Gov. Haley Barbour, Smith was awarded the accreditation of certified public funds investment manager by the Association of Public Treasurers of the United States. Smith has been endorsed by Brad White, former Mississippi Republican Party chairman. Smith, 30, enjoys fishing and (somewhat jokingly) sleeping when he can find the time.
Q — Tell us about your background.
A — I was one of Gov. Barbour’s budget advisors until about December, and that’s really what got me interested in running for treasurer. We’re going to have about a $1-billion hole in the budget compared to past years, so I think there’s going to be enormous pressure to do things that look good on paper but that ultimately drive up the cost of capital and in the long run can increase taxes if we don’t make the right decisions.
I’m originally from Jackson. Went to Harvard undergrad (studied government) and then was with Gov. Barbour in ‘03 and ’04. Went to law school (at the University of Virginia), worked for a handful of firms in Jackson and for Cravath, Swaine and Moore, LLP, in New York. Then I clerked for Rhesa Barksdale on the Fifth Circuit (Court of Appeals) and then came back to the governor’s staff in 2009 (as counsel) with a focus on doing legal work, but with a real emphasis on fiscal and budget issues.
I worked on his campaign and then was part of the policy shop in 2004. The real focus then was doing issues related to life and social issues. We got the Legislature to pass seven bills that year dealing with — the biggest one we passed was the conscious conception law. It creates a legal right under Mississippi law to not participate in procedures that violate the conscience of a provider or a payer of healthcare. It’s primarily abortion-focused.
Q — Why do you want to be treasurer?
A — I want to be treasurer because of the serious budget issues we’re facing. The National Association of State Budget Officers and the NGA put out a study looking at historical trends a few years ago, and one of the things that it noted was that historically speaking, it tends to take two to four years for state revenue collections to return to pre-recessionary levels. So, between the fall off in revenue and the end of the federal stimulus, we’re probably looking at around a $1-billion hole in the budget — less than what we had to spend in 2008, which was the high-water mark. That I think is going to create an enormous amount of pressure to budget in a way that is not in the best interest of the tax payers, either by raiding the special funds, emptying out the rainy day fund and also borrowing money. I think if we’re not careful about those two things, taxes won’t go up in the first year, but they’ll go up in the long run. And we also run the risk that we’ll increase the cost of capital and see our borrowings become more expensive over time because we’ve made poor decisions. And I think that ultimately has an economic impact on the state, because you create a more hostile taxing climate. I think the treasurer can play a role in that, both as member of the Revenue Estimating Committee in making sure we make reasonable estimates and also as a member of the Bond Commission. In Mississippi the Legislature authorizes debt, but the Bond Commission has to approve it. So the Bond Commission can play a role in blocking bad bond deals for the state.
Q — Why do you think you are the best candidate?
A — My title was counsel but my role in the Governor’s Office was primarily as budget advisor, and that’s what I’ve done for the last several years. I think we need a treasurer who understands the state’s finances and isn’t afraid to fight to make sure the decisions we make are in the best interest of the taxpayers in the long term.
Q — The Legislature passed a bond bill of more than $400 million. How much would you approve?
A — Generally speaking, we only need to be borrowing money for projects that are in the best interest of taxpayers. Those are going to tend to be economic development or infrastructure projects that pay for themselves that are essentially investments in the state. It’s tough to tell precisely what will get issued this year, because the way the bond process works, the debt is authorized, but the individual agencies have to present a resolution to the Bond Commission before it approves issuing the debt. The only time we need to be borrowing money, by and large, is if we’re doing an economic development project or an investment that will pay for itself, if we’re amortizing the cost of a long-term asset over the use of its life, or in the event that there’s some sort of a disaster that we have to borrow as part of a comprehensive recovery and renewal project. There may be some sub categories where it would be appropriate to approve debt, but most of them would be derived from one of those three.
Q — University infrastructure projects?
A — We certainly don’t need to be borrowing money this year for something we don’t need to do this year. We’re in a good spot with our bond rating. We need to be very careful we guard that.
Q — Is 30 percent of our debt ceiling too high?
A — I’d like to see it get lower than that. The debt ceiling is a function of the constitution, and it’s at $12.1 billion right now. That’s going to naturally decrease a little bit, because it’s a function of prior years’ revenue. But it’s an artificial number. So yes, it’s too high, but I think using the debt ceiling as a metric for whether we have too much is not a particularly effective measure.
It’s going to take us some time to get there, but (I’d like to see the bond indebtedness at) no higher than 20 percent of the general fund or general fund equivalent revenue.
Q — Where can our state save or cut back?
A — One thing I’d like to see us move toward is a shared services operation. That’s something to be looked at — combining all the back-office operations for agencies statewide in a single shared services center.
NASA operates a shared services center at Stennis, and the federal government has looked at replicating the Stennis shared services center across the federal government because of how much money it saved. (The governor’s budget team) estimated, conservatively, that if you had a shared services operation for Mississippi, we could save as much as $100 million a year once it was fully operational. And that’s the sort of thing we need to look at. Across the private sector and in people’s homes, the economy of the last through years has forced businesses to operate more efficiently. Government needs to be doing the same thing, and the shared services center is a good example of that.
It’d be putting all of your IT, all of your payroll, all of your HR in a central location. And it does require some capital investments early on, because you’ve got to unify the payroll and the IT systems. I think our long-term goal ought to be to have all the state agencies operating in a shared services center, but it’s going to take time and because it’s going to require us to invest some money in it, we can’t do it all at once.
Q — How much money would it take to create a state shared services center?
A — It’s a significant amount of capital. What NASA found was it took them two to three years before they began to save money rather than spend money.
More on Smith:
Favorite Food: Fried chicken
Currently Reading: “Bleak House” by Charles Dickens
Recently Watched Movie: “The King’s Speech”
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