- Senator Ogden Driskill and State Treasurer Kurt Meier are among the leaders on a new bill in the legislature this year.

It's called the Generational Investment Account, and it promises to invest big money for big investment income up to a hundred years into the future.

I'm Steve Peck of Wyoming PBS.

Join us for Capitol Outlook.

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- Welcome to Capitol Outlook.

I'm very happy today here at the Wyoming Capitol to be joined by two veterans of the state government experience.

State Senator Ogden Driskill, Senate District One Devil's Tower.

And State Treasurer Kurt Meier, you're in your middle of your second term as treasurer.

Correct?

- Correct.

- And you were a legislator for a long time.

- Yeah, 24 years.

- Prior to that.

So between the two of you, we've got 40 years or more prowling the halls of the Capitol.

Mr. Treasurer, tell us quickly what the state treasurer's job actually is.

- There's a saying that if you've seen one state treasurer, you've seen one state treasurer, and that's very true.

Our job primarily is in investments.

It's also in unclaimed property.

And we have a full, very skilled, and knowledgeable accounting staff that keeps all that together.

We also have in-house counsel because we have to basically negotiate a lot of very in, I guess, complex investment contracts.

And so it's a, I guess it would be a full-service shop.

We supply about 30% of the money needed to run government and that makes it a very rewarding experience for everybody that works there.

- Senator Driskill, you are listed as the primary sponsor of a very interesting piece of legislation, Senate File 197, which would invest money above and beyond what's been invested in a concept of investing that was controversial at the beginning or has been from time to time.

But I think now we'd agree, or most people would agree, that the idea of setting a lot of money aside as an investment and then building from the income that that investment earns has been a pretty good thing to the point now, whereas Treasurer Meyer pointed out, we're getting a lot of our money for state government operations off investment income, aren't we?

- Yeah, we get 30% of our general fund spending.

And you know, the taxpayers out there, some of them say, "What about our money?"

And it's really interesting by investment, what we've actually done or what the treasurer and the past people that put it together have done, is actually lowered a potential tax by 25%.

- Yeah, I think of that.

- So you turn it and look at it the other way.

And it's really not the way they look at it.

It's they say, "Well, we've got the money.

Let's spend it."

And that's what a lot of families do.

And then they find themselves destitute.

And so Stan Hathaway back at the start of the investment end.

And I really look at-- - Now, let's just stop for a second.

Explain to viewers who might not remember who he was.

Two-term governor, elected 1966.

- '66.

- And elected again in 1970.

And his administration had or came up with this, I dunno if they came up with the idea, but codified it, embraced it, and put it in place.

Okay, continue.

- Yeah, so under Hathaway, he came in with, I believe less than a hundred dollars in the state treasury.

- $100.

- $100, I believe.

State was basically broke.

- [Steve] Wow.

- He left with a lot of money, but also with the idea in it.

Once again, this bill is exactly the same.

My name's on it.

I had no way claimed the idea or what it is, so I look over at the treasurer next to me.

He's pushed it for a number of years.

The Captain Committee has pushed it.

You know, like all good things, a lot of people fight it right till the end and then they were all a part of it if it turns into a good deal.

And I've watched that with the Wildlife Trust Fund and some of the other things.

Hathaway is the same way, when you look at the PMTF, there's-- - Permanent mineral trust fund.

- Mineral trust fund.

- Which has a lot of-- - And so how it's funded and how it got built is a piece of our mineral wealth automatically flows in to a savings account.

And what this is is a parallel to that.

So now we're creating a second one.

So we can see in Wyoming right now for everyone out there, as our mineral industries are on a downward path, the state has to figure out how they're gonna fill that revenue gap going forward.

And, you know, either you fill a revenue gap or cut services or do a combination of both of them.

And this gives us a chance to do those two plus another thing is, should the state be able to fill this, make this bill run, turn it into a generational wealth fund.

It allows us fiscal independence from the federal government, not something we all cry about in Wyoming.

And really, if this fund is successful, it allows Wyoming to be fiscally independent 30 to 50 years from now.

- So the way that would work, and I'm pleased to acknowledge that Treasure Meyer and I had a conversation.

I said hello, and you said, "Let me tell you about this thing, this idea that we've got," a couple of weeks ago.

You've both noted today that it's been adjusted as it's come into the legislative process, which I think happens with every bill.

That's just unavoidable.

But the idea is that we could set aside a substantial amount of money for a long period of time.

And in terms of the fiscal independence that Senator, you just mentioned, you put that in some very dramatic terms for me, didn't you?

- Yeah, yeah.

And I think that it isn't a new idea.

New Zealand has done this.

They did it for a specific use case.

They put about 2 billion in a fund.

I think it was 30 years ago.

The reason they did that, they knew that their retirees, when they were coming up in 35, 40 years, they didn't have enough money to actually pay for the retirement.

So they put in retrospect a small amount of money over a long period of time using the power of compounding.

- And left it alone.

- And left it alone.

And interest was made on interest was made on interest was made on interest.

I think that's kind of how the Rothschilds got rich, you know, but essentially, we're looking at the same type of thing.

And I think that Senator Driskill was 100% correct.

The use case that we have is really to first address the lack of mineral wealth that we no longer have.

Coal, for example, we lose over $500 million a year because we have less coal and we've lost the ability to fund school construction because we no longer have coal lease bonuses.

So that's the first use case that we're looking at, is to replace that revenue stream so we don't find ourselves in immediate structural deficit.

- Yeah, you know, this is basically a, you look at an IRA, it's an individual retirement account.

This is a state retirement account.

And it's exactly what the treasurer said is, should we do that?

And all these accounts work that way is it does two things.

There's one, when you put in that big chunk of money and you know that it's in a long window.

It allows him to get a better return on the money.

So we get a much better return on the money.

This is not a rainy day account.

Everybody talks about it.

One of the things that's gonna have to happen over time is we have to make it where it's inlet so that we can't reach back in and rob it in a bad time 'cause we're all that way.

That's IRAs work the same way.

There's a huge penalty if you dip into them.

And we need to have the same in this account 'cause we're gonna go through hard times.

So we think we need that money.

If we can get this structured correctly and get the funding out, once you've set up that revenue stream out, then you don't ever look at it in your budget again.

So once you're pulling out the yearly amount that the treasurer would like to pull out, and we'll get that structured.

At that point you don't look at it as part of what you need.

It's what goes into it.

The second level of this for everyone to understand is, and I've been really hardcore about it, everybody's like, "It's our tax money."

And I said, "No, it's not.

It belongs to all generations of Wyoming."

And for me, I put a lot of money away the last couple years when I was president of the Senate and everybody said, "You starved us out."

And I said, "You know, what I did was left a future for my grandkids and great-grandkids and future generations."

Any family that's had wealth can spend it in that generation.

The wise ones do the Rothschild deal and they leave a fund ahead for them.

And that's really what we need to do with our mineral wealth in Wyoming is all generations need to share in that wealth, not just the current one.

- That's a difficult, I think can be a difficult thing for a sitting legislator to think about because there's the pressure of the session, the pressure of the next budget, the pressure of the next committee meeting, the next amendment.

But when Treasurer Meyer, when you told me about it, you talked about it in terms of 100 years from now and there just aren't many bills that look 100 years into the future.

And I think at the very basic level, we're looking 30 years into the future as it's being talked about.

Now you mentioned a test drive period of a shorter amount.

It's been a few years ago now, but state investment was sort of opened up in a way that state dollars could be used in more of a, and I'm pretty simplistic here in my conversation about it, but in more of a market-based kind of investment.

And that's worked out pretty well for Wyoming.

It was iffy.

People didn't know.

But the returns have been outstanding, haven't they?

- Yeah, it's been an evolution since the 90's where we're basically 50%, equity is 50% fixed income.

And we moved a few years ago to what was called a reference portfolio and that's a 70/30 portfolio equities and fixed income.

But we can invest in anything as long as we stay underneath the risk.

So we're going into a total return risk adjusted basis of investing.

And that has essentially our office for the last six years of beating our benchmarks.

And we have beaten them by over a billion dollars.

In fact, that's enough excess revenue that we could fund our office for 150 years, you know?

So we've gotten that type of returns.

But most of that goes back into the corpus.

And when the corpus grows, the amount of money that goes out of it grows, what we're looking at is the most efficient methodology of investing money.

Because you can take $3 billion over 30 years and yet 3 billion sounds like a large number when looking at 30 billion now.

You know, it's a relatively small percentage, but you're only doing it at a little bit every year.

And with that compounding, making money on your money, essentially you get the same return on the 3 billion over 30 years as if you had a standalone fund that was $27 billion.

So, you know, what you're able to do with a small amount of money is really guarantee the future of the state of Wyoming.

It won't make any difference.

You know, in 30, 60 years from now, what the minerals are, what we're doing, how our business is, we'll probably be somewhere around rather than 30%, we'll be up to 65, 70%.

And when you're up to that type of a level, then you know you're not gonna have to have the sales tax increases.

You're not gonna have property tax increases.

You might actually have enough money to go in, and at a reasonable basis, lower the tax rates, you know, forever.

- That'd be popular with the voters in Wyoming.

I bet it would.

- You know, we've seen that upfront is, said, "No voter ever.

I'd like my taxes raised."

You know, everyone wants to pay less if they can.

And, you know, kudos to the treasurer's office.

He's probably one of the few in the United States, has a trading desk in his office.

The investment team that's not just dispersing money.

You know, our treasurer is unique in the state of Wyoming and the fact they handle double digit billions of dollars and they've become unbelievably efficient.

So when I went in 15 years ago, vast amounts of our money we're just kind of sitting in accounts floating around.

One at a time, the treasurer and his staff, and there's a whole bunch of other people as Pat Fleming in particular I talk about, have really taken his fund by fund.

And we've gone from having a 0% checking account to a checking account that does 5%, 7%, 10%.

And when you add that up over all the state accounts, it's absolutely phenomenal.

The efficiency they've put into our government.

And I keep going back.

It means we don't pay more taxes.

Everybody keeps talking about why do we save this money?

Why aren't we using it?

We could.

And exactly what he said is if we can hit that, and there was the same number on that, 70, 80% of the budget gets funded out of some type of investment income, it's transformational.

And we're already, we're in a rarefied piece.

There's only a couple other states that are even close to Wyoming.

- And one of the things I wanna bring back that Ogden said about being free from the federal government.

I don't know how many times that you'll hear, "Well, we can't do that because the feds are gonna take away our highway funds."

- If you raise your speed limit, for example, you might lose federal highway.

- Right, right.

Or if you do something education that they don't like, they're gonna take away the educational funds.

- Regardless of the-- - All our healthcare is tied the same way.

- The healthcare is the same way.

Our hunting and our fishing rights in a lot of ways are tied the same way.

So essentially, I say, I wanna be able to make sure that the future generations can tell the federal government that we can buy every acre.

We want to, you know, of the land that you have here that really should be turned back to us because we'll have the money to do it.

And if you tell us that you're gonna take something away, we can tell you to go pound sand.

- The thing I noticed about the bill and reading about its initial introduction, and I want you to tell me where it stands today, with a couple of weeks left in the session, I think you'd at least be generally pleased with the reception it's been getting.

Now, where's the bill stand now?

- Stunning reception, you know what?

When we started, the treasurer and I met multiple times and we put the bill together and we expected it to be a fairly hard fight.

And as we went into it on the floor and the concept really got fleshed out, we talked to everybody.

People are excited about it.

You know, I think partially, because of the permanent mineral trust fund, there's an understanding of what an investment in the future is.

And everyone wants to be a part of something that really leaves a mark on the state.

I will represent to you, and I said it on the floor, this is probably the most important bill in a decade in the state of Wyoming.

If you wanna talk about a long window, this is probably the most important bill.

The one that'll stand the test of time is do we have an impact on future generations making their life better?

And this bill is the one thing I've seen and people of united behind it, is we'll do some short term pain, i.e., we're gonna drain some money out of accounts that we probably could spend.

We always have a need for the money.

But for long term, this really is very impactful for the state.

- This, for so many years, the talk has been about we've got to, we're worried about our over-reliance, our dependence on minerals income, we've gotta diversify the economy.

Those are great efforts.

Talking about employment and quality of life, of course, that's important.

And I know that effort will continue.

But if something like this could be passed and be in place, a lot of what the objective of the diversification of the economy is all about could be accomplished.

- I think so-- - Without the pressure then to, so much pressure to bring in a new company or a new manufacturing center or something like that.

- Yeah, but if you look at it, every new job we get in, I think that actually creates a deficit of about, I think what is, they pay about three to $4,000 in taxes everywhere.

- Yep, 40,000 in benefits.

- You get 40,000 in benefits.

And a lot of that has been born on the back of the minerals industry.

I think if we can take that off the mineral industry, maybe they'll stay around a little bit longer.

You know, so that's one of the areas where I would say, once we get to that point, look at it and say, "Well, what can we do to help our core industries be healthy and remain here?"

That's one thing.

And the other thing is just that it's a situation I believe that, and this is something that both Ogden and I agree on, is that if basically the PMTF on steroids, you know?

- Steroids.

- And it is talking to the new house members over there who really didn't get any exposure to this, they're starting to grasp it.

And I'm starting to understand that they don't wanna spend, you know, general fund or rainy day fund money to fund it.

And so we're looking at other ways that we could possibly get the ball rolling.

I'd like to, you know, do everything that Ogden wants to do 'cause that kinda set it up.

But I'd like to test drive it for a year 'cause I think we understand, as Ogden mentioned, that it has to be in violet, which means at some time we're gonna have to put into the constitution.

So I wanna make sure that all the mechanisms are running.

- The word in violet, meaning once it's in law in the constitution, we can't constantly be dipping into it all the time.

- You can't pass the law to do it.

You've gotta see the yin and yang of us as I'm a nuts and bolts guy on the bill, putting it together, getting a pass.

This is my investment guy.

He's gonna figure out how the best funding source works and how we invest the money.

- One of the questions of course that comes up is, and the amount of money being talked about, at least at the beginning, was a hundred million dollars a year.

Can the state afford it?

What does the data show from the previous years?

Obviously, you think this is affordable.

- Well, I think it's important.

What we've announced is that we've done, if we borrow from the PMTF, we went back to the six years and the average amount of money growth that the PMTF has had, and that is from the severance taxes and minerals coming into it every year and our investment income.

And that has been about $533 million a year.

So if I drop that down to $433 million per year and let that run its course out, we still continually to have more and more money that goes into our spending policy that goes directly to the general fund.

So we never have a decrease in funds.

It continues to increase.

And the interesting thing is that when you get the maturity in years 31 through through 60, you essentially get the power of all that compounding.

That a hundred million turns into 700 and I think $61 million.

And so we pay the permanent mineral trust fund back $761 million.

And that's principle and interest.

And so essentially, you get this big bump starting in year 30.

And that's, you know, I know we're gonna continue to have this in the reduction in our mineral income.

And so at the, I think, the appropriate time, we're gonna start backfilling and growing the permanent mineral trust fund with investment income and set it up to be able to have the same effect that it has had and that we're enjoying today in the future.

- So the state budget, depending on how you wanna look at it, runs somewhere between six and $10 billion.

Six and 10 billion.

When you talk a hundred million dollars, you're talking a tiny amount.

Yeah, you can afford it.

It's called prioritization.

And that's really what the legislature does.

They decide how to spend it.

And I represent to you, we easily can fund a hundred million a year.

And if we do this this way, the state will never on a hundred million a year, they'll never miss it.

- Where does the bill stand here on?

We're on a Thursday morning.

We have about two weeks left in the session.

- Yeah, yeah.

What's the status of it?

So I was just over a speaker nine and daily for the last number of days.

I believe we're ironed out.

Now the treasurer's been working as well, and between the chair of a props and the majority floor leader, which is the proverbial freedom caucus.

They control the house.

No doubt about it.

I think we're, and I hate to speak without having them sitting by me, but I think we've got a green light.

It's coming out.

It'll go to committee and I expect it to pass.

I think we've found a route.

I think people understand the future.

That's one thing I will say for every legislator is we all have differences in policy opinions, but I think every one of them wants to do the right thing for Wyoming.

And the further the window gets out, in truth the easier it gets.

'Cause that they all wanna be a part of something that affects future generations.

And this will be the one that, for the people that are in, for the next 20 legislators, they're gonna say, "I was a part of that."

- I was part of that.

What do we think the governor's opinion on it is?

- I had a talk with Mark and I know he is not gonna veto it, you know?

And we've been hot and cold on that one going back and forth.

He supports it to where he is neutral.

He said that he would support it if it got to his desk, yeah.

- Senator Ogden Driskill, State Treasurer Kurt Meyer, I have enjoyed the conversation about this potentially transformative idea.

The generational investment account is what it's called.

Good luck with the remainder of the session and thanks for being with us this morning on Capitol Outlook.

- Thank you.

- Thanks so much.