But first, thanks to Nancy Willing's Delaware Way, here is the response from State Treasurer Chip Flowers that neither the WNJ nor Governor Markell wanted you to see--sent to all legislators:
From: Flowers, Chip (Treasury) [mailto:Chip.Flowers@state.de.us]
Sent: Friday, June 28, 2013 7:12 AMSent: Friday, June 28, 2013 7:12 AM
Subject: S.B. 151 (STRONGLY OPPOSED - POTENTIAL DEFAULT ON STATE OBLIGATIONS)Esteemed Members of the Senate:Unfortunately, the Delaware State Treasury (State Treasury) has been informed that a bill (S.B. 151) has been introduced that would not only exempt the state's $2 billion portfolio from the requirements of open government, but would grant members of the Cash Management Policy Board (Board), which only meets twice a year for about a hour, the right to allocate state funds to banking institutions - which would restrict the ability of the Treasurer to pay the obligations of the State of Delaware and ensure the state's cash flow needs are met on a daily basis.
The State Treasury makes cash flow and allocation decisions on a daily basis (based on competitive rates and optimal allocation with daily input from the Treasury's independent financial adviser, Credit Suisse) and can not defer this responsibility to a Board that not only meets twice a year, but has also requested that millions of state funds be guaranteed to a particular bank at the request of a former high level state official now working for such bank seeking more fees paid by the state.
Further, exempting the state's portfolio from open government laws lacks transparency and would give this Board the ability to conduct inappropriate allocation decisions in secret. This is a practice that the State Treasury cannot support or condone and no other state has granted the ability to allocate treasury funds to a Board operating in secret and counter to their treasury.
As noted, the State Treasury has improved the performance of the state portfolio by millions, reduced fees charged by banks, ensured the state obligations are met daily, and has enforced open and competitive principles - often in conflict with the private members of the Board seeking to steer contracts and investment decisions inappropriately. Without oversight from the state's open government laws, an unelected Board would have no accountability.
The State Treasury cannot be responsible for ensuring state obligations are paid if S.B. 151 is passed and the record should note that this could impact our ability to protect the state's AAA bond rating if the allocation decisions made by the Board twice a year result in the state failing to make timely payments on state bonds. In light of this fact, since the bill may require the Treasurer to act in manner in consistent with his duty to protect taxpayer funds and counter to his public oath of office, if passed and signed by the Governor, the State Treasury will defer enforcement of this bill to the Office of the Governor and the legislative branch, after a constitutionality review by the Supreme Court of the State of Delaware.
In this email Treasurer Flowers makes a number of assertions. If ANY of them are true, then we have far bigger trouble on our hands than an uppity State Treasurer.Under normal circumstances, the State Treasury would have issued a full position statement on this major legislation after consultation with our office or the State Treasury's independent financial adviser. However, since there was no prior consultation, the full position statement cannot be issued prior to a potential vote on the measure this weekend. Best, Treasurer Flowers
To lay them out seriatem:
1. That the Cash Management Policy Board only meets twice a year (which, if true, would completely invalidate the need to exempt them from the Administrative Procedures Acts--or are they meeting.conferring outside of real meetings in violation of Sunshine requirements?).
2. That Flowers engaged Credit Suisse as the outside advisor; most of the rhetoric against him has been that he "hired some outside guy" to advise him.
3. Flowers explicitly accuses members of the CMPB of unethical and potentially illegal conduct. Has he made this charge before? Has it been investigated? How can you change the law in favor of the CMPB when such an allegation is on the table?
4. Flowers charges that this proposed legislation would allow the CMPB to meet in secret and without oversight. Sure looks like that to me.
5. Flowers alleges that no other state allows what is proposed in this legislation. Is this true? Can you vote for this law without knowing?
6. Flowers alleges that he has improved the performance of the portfolio. It's funny but I have never seen ANY allegation that his method of investment management has lost us a dime. Wouldn't it be prudent to know if what he is doing has been working?
7. The Governor proposed a major change to the operation of the State Treasury and the President Pro Tem and Speaker of the House introduced it at the last second (to avoid public hearing), and did so with neither consultation nor even notice of the State Treasurer.
These are all legitimate questions to be answered. The answer could indict Chip Flowers as a dangerous political opportunist, but since we've already got one of those as governor (who lost $21.5 million of our tax money gambling on Fisker), why is there no scrutiny of the smelly fish inside this piece of legislation.
Allow kavips to tell you why. Remember that David Marvin, Republican, and big contributor to Markell's PAC, sits on the CMPB, and is one of the prime complainers about the State Treasurer.
Here's what kavips found by accessing campaign finance reports:
David Marvin $35,950....Mr. David Marvin $600.00Nancy and David Marvin $1200.00
specifically.Markell 2008 $1200.00Markell 2012 $1000.00Velda 2010 $ 450.00
Watch the vote on this one...
Lopez 2012 $1200.00
But his biggest $25,000 goes to the PAC A Committee for A Better Future ...
Watch these votes tomorrow...
Bryon Short 2009 $600.00Melanie George Marshall (then) 2009 $300.00Pete Schwartzkopf 2009 $600.00John Atkins 2009 $600.00(Markell 2010 $3,000)Daryll Scott 2011 $600.00Helene Keeley 2011 $600.00DelDems 2011 $6,000Dave Sokola 2011 $600.00
So, that should give you an idea on how the vote will go...If--and it is a big IF--there were actually "truth in donating," we would all have known about this in advance.
But Governor Markell is smarter than Attorney General Biden. When he absolutely needs something (like to pay off a serious political debt), he doesn't just send it in through the usual procedures and hope for the best, like he did with universal background checks or marriage equality.
Nope. He saves it for the last minute when HB 88, constitutional changes on bail, and a whole host of other issues are on the floor for one last day, and when the back room deals and horse-trading happen almost too fast to follow.