Q&A: Treasurer warns of fallout if debt ceiling isn’t raised, previews legislative session
Faced with an ongoing stalemate over raising the federal debt ceiling, Treasurer Zach Conine said lawmakers are engaging in a “political exercise” that will have damaging, real-life consequences for Nevadans who otherwise don’t care about arguments in Washington.
“I think it's just absolute insanity,” Conine said recently. “This is a function that needs to get done. And everything we do that stays away from that moves us further from the light.”
The federal government made the decision years ago to spend the money, Conine said, emphasizing that raising the debt ceiling has nothing to do with spending new money and instead is about paying bills and protecting financial markets.
If the debt ceiling is not lifted, Conine said the issue will reverberate through the entire financial market and everything will become even more expensive. A report from the U.S. Department of Treasury said that “failing to increase the debt limit would have catastrophic economic consequences” that would precipitate another financial crisis.
“Your mortgage will go up. If you have an adjustable-rate mortgage, it will take a hike. If you have consumer debt through a credit card, it goes up,” Conine said. “All of these things start to get more expensive. And again, for what purpose? What's the upside?”
His comments came during a wide-ranging, sit-down interview Jan. 25 with The Nevada Independent in which Conine discussed his role as treasurer, his unconventional approach to the position, upcoming legislative priorities, the need to raise the debt ceiling and his commitment to addressing inequalities in Nevada.
The treasurer serves as Nevada’s chief financial officer and is charged with overseeing the state’s financial accounts, including a portfolio of about $7 billion in investments. The office also has several divisions, including ones focused on unclaimed property, college savings accounts and the Millenium Scholarship for college-bound Nevada high school graduates.
Since taking office in 2019, Conine, 41, has used his role as treasurer to make unprecedented investments in housing and savings accounts for people with disabilities, among other actions.
His office also took a significant role in tracking and disbursing billions of dollars in federal COVID aid during the pandemic and drew headlines from a decision to divest from assault weapon manufacturers or sellers after a series of mass shootings.
During his second term, Conine said he is focused on addressing generational wealth gaps in the state and ensuring Nevadans have access to housing and other opportunities. He also is proposing measures that would establish loan forgiveness for medical providers working in Nevada and a baby bonds program that would create a savings account for every child who is on Medicaid when they are born.
Treasurers can sometimes fall into a ministerial function in which they’re simply doing the things that other agencies are asking them to do, Conine said, adding that his office views the role as broader.
“Our underlying work is investments,” Conine said. “If the concept of investment is taking a little bit of opportunity now to create a little bit more opportunity later, we keep going back to that: So what can we be doing now that makes Nevadans lives better for generations to come?”
The following interview has been edited for clarity and length. Explanations of certain terms or ideas have been added in italics as needed.
You’ve used your position as treasurer to implement quite a few programs and new initiatives. What are you most proud of accomplishing during your first term?
There were things that we did because it was a natural and reasonable and necessary expansion of the office and the work that the office already did.
For instance, in our college savings division. Historically, college savings has been about selling products. We're going, ‘Hey, you should get a 529 plan, you should buy prepaid tuition.’ Well, so many Nevadans don't have access to the resources where it makes sense to spend $26,000 on a prepaid tuition program, but they still need to be able to access higher education.
And so instead of just selling products, we started thinking about that office as a way to help Nevadans plan for, save for and pay for higher education. Not just college, but higher education, a four-year university, a two-year college, career and technical training, joining a union, trade schools, everything.
And so we put together the first scholarship database for the state, which is a bipartisan effort, taking both public, private and government scholarships, putting them all in the same place so that folks could access them. We started looking at our programs and reaching out to schools that we hadn't reached out to before because we weren't going to sell a bunch of 529 programs in Title I schools. But we know that there's an opportunity and a population that needs help.
In unclaimed property, again, a traditional Treasury function, we started thinking about that, not in an ‘Alright, how do we make sure we get the most in, but how do we make sure we get the most out?’
Over time, the amount of unclaimed property the state has in trust has gone to over a billion dollars. As of this morning, I've returned $183 million to Nevadans, which is the most of any treasurer at this stage by quite a bit. We should pass former Treasurer Kate Marshall, who returned the most unclaimed property of about $225 million, a couple of months from now. And we're excited about that.
And the work is not just to get the money out the door, the work is to make sure that we are helping people find it.
We did a pilot of that during the pandemic when we saw that [the Department of Employment Training and Rehabilitation] just did not have the resources to keep up, as that system had been under-invested in for generations. So we took the list of everybody who had filed for unemployment and ran it against the list of people who have filed for unclaimed property. It had never been done before.
We found $10.2 million owed to people who had filed for unemployment. And so we went to cut them checks.
What are you proposing for the upcoming legislative session?
One of our legislative initiatives going in the session is a baby bonds program, based on a program Sen. [Cory] Booker (D-NJ) has been pushing federally that a couple of other states have tried, which would effectively take a little bit more than $3,000, and put it into an account for every child born whose birth was paid by Medicaid in the state, which is about 44 or 45 percent of Nevadans.
And that money then grows over the child's life until the time that they become 18. And then they can use it to do down payments. We were with the Federal Home Loan Bank of San Francisco yesterday discussing the work that they're doing to encourage homeownership, and one of the conversations was around access to homeownership and sort of barriers for the African American community and from the Hispanic community. And in both cases, one of the largest barriers was lack of access to generational wealth.
When I purchased my first home, I was able to go to my parents and say, ‘Hey, I need some help.’ And they helped me and I didn't think anything of it. But so many Nevadans don't have that opportunity.
But a program like baby bonds could give them that capital that's necessary to make that sort of choice. When it comes to the cycle of poverty, the first generation that can break out of that cycle often brings all the generations that follow behind them out of that cycle.
We're going to try to get that started this year, which means the first kids would be born in July or August or early next year. And that won't show dividends for 18 years. But in 18 years, those kids' lives are going to be better, their families’ lives are going to be better and their kids' lives are going to be better. And theoretically, the state as a whole will be better because it'll be less of a draw on social services.
Are there any other measures your office is going to be pitching or proposing?
We have an unclaimed property bill. Now that we have the ability to directly cut checks for Nevadans when we have their unclaimed property, the next thing we realized was that many state agencies have effectively siloed data. So we can't get the information of, say, Nevadans who are on SNAP [Supplemental Nutrition Assistance Program] benefits or WIC [Special Supplemental Nutrition Program for Women, Infants, and Children] benefits or Medicaid or anything else and run that database against the unclaimed property database unless there's statutory permission to do that. So we're going to do that.
And then finally we have a couple of cleanup bills for the office, but we also have a public service loan forgiveness bill, specifically targeting underserved areas and the provision of mental health services, women's health services, services in rural areas, optometrists and dentists. And that bill, hopefully, will help supplement the existing programs that are there to try to both incentivize doctors to stay here and then to keep them here for the long term.
Your office played a significant role in disbursing rental assistance during the pandemic and has implemented some programs aimed at addressing the housing crisis. Why did you prioritize housing? And are there any other housing-related issues your office is focusing on?
At the beginning of this crisis, we looked back and said, ‘How do we avoid what happened in 2008 and 2010, from happening again?’ The more we dug away at that question, the clearer it became that housing was the central, long-term fragility in the market.
When we look at Nevada’s economy, when we look at tax revenues, how much of that is caused by consumption? If people are housing insecure, they're economically insecure and they're not going to buy things. And so you get this ripple effect, which leads to job loss and then leads to more homelessness or more home loss, more foreclosures, etc., etc., etc.
Supply is one of the biggest underlying problems. We started looking at ways that we can help with supply. And the infrastructure bank created a partnership with the AFL-CIO housing investment trust, wherein they're going to multiply state dollars into a project, which allows us to spend that money and make it go further. Our work on the Board of Finance, which our office staffs and is responsible for approving affordable home bonds, that work has shown, again, how important these things are and how important doing them quickly is.
In talking to developers, we realized that there are developers for affordable and workforce housing that don't work in Nevada, just because they haven't. We're a relatively small market in the space. And so talking to those developers, bringing them into the state, encouraging them to work here, figuring out what the issue is and why they can't.
So much generational wealth is based on homeownership. The equity growth in a home is such a large portion of what parents pass on to their children, children pass on to their children. And so if we can figure out a way to increase homeownership, we can figure out a way to decrease the amount of someone's paycheck that's going to housing, more of that goes back into the economy and it just opens up other opportunities.
It’s also difficult to attain generational wealth when rental prices are higher than a mortgage.
Right. The Federal Home Loan Bank has been working on starting to use the dollars paid towards rent as a qualifier.
In the past, you paying rent doesn't show up on a credit report. It doesn't help you but it should, just rationally. And so we're supporting those efforts to try and include that because it's that type of thing.
It's figuring out who can build more housing and how do you figure out the land around housing. We all know that water is a problem, certainly in Southern Nevada, but we know that multifamily housing is more water efficient than single-family housing. So how do we encourage that?
One of the things that comes up a lot is, ‘why don't we build a bunch of multifamily housing, I've got this great parcel on the edge of town.’ But it doesn't have access to transportation, it doesn't have access to services, doesn't have access to jobs and everything else. So trying to work with everybody to realize that's not the solution, but there is a solution on infill.
In his State of the State address, Gov. Joe Lombardo mentioned providing public land for housing projects but did not discuss any priorities related to affordable housing beyond the land. What does his lack of discussion of other projects mean for ongoing projects?
We don't think that the lack of mentioning housing means that housing isn't a priority for that administration.
We know that the Nevada Housing Division, which is part of the Nevada Department of Business and Industry, wakes up every day and figures out ways to make the state better on the housing front. That work has not stopped. The private activity bond requests coming into the Board of Finance have not stopped. The allocation of the Home Means Nevada funds getting out the door has not stopped. Our work with the state infrastructure bank has not stopped.
I guess my general assumption is not having it in the State of the State means that we're going on the same course.
Speaking of rental assistance, how is that program going? Is the state looking at maybe finding a way to alleviate some of the need as those dollars run out?
Clark County, the Reno Housing Authority, the Rural Housing Authority were excellent partners in administrating an idea. And the local partners were the ones who really figured out how to get the money out the door pretty efficiently. The last number I saw was we were 13th in the nation for money out the door for housing assistance.
So now, the question is sort of what happens now. The majority of the funding is expended, Clark County has rolled out its new program, which requires being on a fixed income and various other things more of a traditional rental piece of business.
But we think the highest and best use for the Treasury right now, based on what we know, is to keep working on increasing supply.
Switching focus from housing to student loans. As many as 198,000 Nevadans have pending student loan forgiveness applications with the federal government. How is your office approaching student loan debt?
We look at student loan debt and our work there as sort of three functionalities. One is to avoid taking student loan debt that doesn't need to be taken. And that's increasing the FAFSA [Federal Application for Federal Student Aid] completion rate. That's making sure the students understand the wealth of private and public scholarships that are available to them and apply for them.
There are plenty of scholarships in the states that have zero applicants. Now, they're pretty specific. But if you're checking, maybe you are the volleyball player who really likes biology. And so the work of going through and connecting people with that, that's step one.
Step two is working with the institutions to make sure that we have a funding pipeline all the way through. Nevada doesn't generally have an access issue. If you want to go to college, you can go to college. We have a completion issue. So the number of students who complete is lower here than it is in other places.
The most expensive student loan debt you can possibly take out is the debt that isn't associated with a degree at the end of it. Two years of student loan debt and no degree to speak of means that your earning potential hasn't moved at all. But your debt has gone way up. So making sure that that doesn't happen.
And some of that is work on the Millennium Scholarship to try and evolve that for sort of a new generation, making sure that the [Nevada Promise Scholarship] is working, and looking and working with Nevada System of Higher Education, working with the chancellor, to make sure that we are thinking about all of these sources of funding together.
And the third piece is the work that our student loan ombudsperson does. And so during the 2019 session, Assemblyman Howard Watts (D-Las Vegas) ran a bill that was sort of a student loan bill of rights that eventually focused on the creation of a student loan ombudsperson who exists in our office. And she works with student loan borrowers before they take money, and after they take money, to make sure that they're on the most effective payment plan and they're taking advantage of programs out there.
A couple of months back, she helped a teacher who had about $112,000 worth of student loan debt get it all forgiven through the existing public interest loan forgiveness program.
We started to do some education around the president's loan forgiveness program, obviously, that got waylaid. But as interest comes back on as the freeze stops, working with borrowers to make sure they've got a good plan.
Lombardo is proposing an additional $630 million into the Rainy Day Fund. Do you agree with that amount? Democratic leadership in the Legislature has criticized that decision, noting that the extra dollars could go to support needed resources, such as additional rental assistance.
I think we're the most consistent and stalwart defender of the Rainy Day Fund. At the end of the last session, when there was a conversation about taking some of the dollars that were supposed to automatically go into the Rainy Day Fund and putting them in other places, we were the ones that stood up and said, ‘Don't do that.’
From a credit rating perspective, which is the thing we care about the most, consistency matters. And so they're less concerned about the number, they're more concerned that there is a [mechanism] to fill the Rainy Day Fund, and that there's a [mechanism] to use it — and that you use it.
During the Great Recession, there were states that had big rainy day funds, and they didn't draw from them. And they were like, ‘We know we are making all these cuts. But look, we're keeping our Rainy Day Fund strong.’ And the rating agencies reacted negatively to that, because they were like, ‘Well, that's the what's the point of it then?’
And so when we drew down the entire Rainy Day Fund at the beginning of the crisis, you'll know we didn't take a single credit rating downgrade during that, a) because of all the other work we do but b) because they understood that that was the purpose of that fund.
We reached out to the rating agencies after we heard the State of the State to see how it would affect us and we haven't heard back yet. Our expectation is, it certainly won't hurt us from a credit rating standpoint.
I would say there's a benefit in being conservative financially. But there is a place where you are so conservative financially, that you're missing out on opportunities currently. Maybe I wouldn't take a vacation because I'm saving for college. But I probably wouldn't sell my house and live in a tent in order to save money for college. You’ve got to make that decision along the way.
How are the interactions between your office and Lombardo’s office?
I don't know the governor that well. We've had a couple of interactions so far and they've all been pleasant. He seems to be deeply focused on getting to the bottom of what could be better in the state.
I think, probably, we’ll disagree on methods sometimes, but probably not on what should happen as far as making the state more efficient and better for Nevadans.
We saw the Lombardo administration propose $75 million for stabilizing the Millennium Scholarship. Is that enough? Does more need to be done there?
$75 million allows us to basically get through the next four years of Millennium Scholarship one-shots. So it's basically two bienniums rolled into one biennium. Certainly continuing to fund the Millennium Scholarship is important. As we've said for, I think, going on four years now, the Millennium Scholarship is insolvent. It's an entitlement program where the revenues do not match the expenditures.
So we hope that over the next couple of years, we can use this time and $75 million to evolve the Millennium Scholarship into being more effective. And we need to do that because at some point, if we don't do that, a future governor, who doesn't have the economic situation that Gov. Lombardo has now, is going to have to make a really hard decision.
Last question. What does the Nevada Way mean to you?
The Nevada Way for the longest time has become this: ‘We're resilient people.’ And so when something bad happens, we're gonna look that thing right in the face, we're gonna get back up, and we're gonna keep going.
I would posit that for the longest time, the Nevada Way has substituted what should be government resiliency for the resiliency of our people. And that we have said, ‘Look, they're going to get back up and they're gonna keep going, no matter what they have to face, they're gonna keep going, and that's great.’
But I think they should face less. I think our government should be stronger. I think our social safety nets should be more efficient. I think we should just do a better job. Let's count on the resiliency of Nevadans to be there when we screw up. But let's screw up less.