State Treasurer Duane Davidson revisited his glory days as a farm boy in Carnation Friday, Feb. 14. He discussed issues around debt, saving and financial literacy with Valley 104.9’s Heather Stark.
Davidson was born into a family involved in dairy farming, logging and other small businesses. Now, he serves as Washington’s 23rd state treasurer.
“The treasurer’s position is a unique position in that it’s an elected position,” he said. “I think we have a great influence on policy, but we don’t have a vote. And so, the main function of the treasurer’s job is to compile unbiased, transparent records for the state.”
Davidson said it is important that both sides of the aisle in the legislature can trust the numbers that are coming out of the treasurer’s office. Regardless of partisan viewpoints, the state is deeply in debt.
About $21.1 billion in debt, to be exact. Washington state has the eighth-highest debt per capita in the country, according to the 2020 Debt Affordability Study Digest. Davidson said the state needs to be careful about issuing too much debt in the future.
“As long as you’re managing it properly, most municipalities can handle a debt pretty easily. And it can be a useful tool,” he said. “Debt in a reduced amount is normally better for governments. It puts us in a better position to borrow in case a dire emergency comes up.”
Davidson said the Rainy Day Fund, otherwise known as the Budget Stabilization Account, has taken the state through some major issues in the past. It was created by the voters, he added.
The Government Accountants Association recommends that the Rainy Day Fund should have about two months of operating cash at all times, he said. That is equal to about 16% of the annual budget.
In preparation for the next recession, Davidson said the state should be “adequately funding” above and beyond recommended amounts.
“I don’t know when the next recession is coming. But I know there’s going to be one. That’s 100% certain,” he said. “And we’re now ending one of the longest economic expansion periods that we’ve ever had.”
The state treasurer said he views recessions like earthquakes: less frequency, greater magnitude. Since the last recession was quite some time ago, Davidson suggests people start preparing.
“I believe financial literacy is so important,” Davidson said. “The financial health of the state is the primary concern of mine, and that includes the taxpayers.”
He said about 45 modules on the treasurer’s website help to educate people of all ages on the importance of financial literacy. The modules, both in English and Spanish, deal with topics of interest to younger audiences and to those nearing retirement, among other things.
“There are there’s something in there for everybody and we are expanding them at all times,” he said.