“It Won’t Be Political”

A Q&A with Mike Collier, the Democratic candidate for comptroller.
Wed May 14, 2014 8:30 pm
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In 2011 Mike Collier was a partner at the global accounting firm PriceWaterhouseCoopers, with no history of running for office, when he saw something that caught his eye: a mention of the state's looming deficit. But it didn't make any sense to him. Turns out his instinctual reaction was right. In January 2013 the outgoing comptroller, Susan Combs, produced a Biennial Revenue Estimate that showed she had severely underestimated what the state’s revenue would be in the 2012–2013 biennium. State leaders, however, downplayed the blown estimate and the severe budget cuts that occured during the 2011 legislative session. But Collier noticed: “I got angry enough to do this.”

By “this” he meant running for comptroller. In March Collier became the Democratic nominee for that job. Winning the general election would be a long shot. State senator Glenn Hegar, the Republican nominee, has never been elected to statewide office before, but in a somewhat obscure race like this one, the Republican candidate has a built-in advantage. Still, Collier is determined to make it a fight. He’s guaranteed to do better than the candidate Democrats nominated for comptroller in 2010—that is, no one. And even a losing campaign would still help address Collier’s concern about complacency, which was galvanized by the not-so-surprising budget surplus this year. “In my mind that confirmed what I had been suspicious of: that one party in charge is bad for Texas,” he said. “From business, I’ve seen this so many times in my life: people whose thinking isn’t challenged make bad decisions.”

Texas Monthly: You haven’t held office before.

Mike Collier: That’s true. My story’s a simple story. I was reading the newspaper in 2011—I was a partner at PriceWaterhouseCoopers at the time—and I read that we had this looming deficit, which I didn’t think made any sense, and then we also chose not to use the rainy day fund. We made these cuts in education. I have always been a real proponent of public education. We got five million kids coming at us. If we don’t do the right thing with these kids we’re gonna have a big problem on our hands. So it didn’t seem like a wise course, and I immediately thought, here’s what happens when one party is in charge. I read that there were no Democrats stepping up.

As happened in 2010.

Right. I said, “Well, somebody’s gotta go do this.” And this is exactly the kind of work that I’ve been doing. It’s exactly the kind of work that I love doing. There’s only a slight variation in the theme, compared to what I’ve done professionally for 28 years. At PWC, we were selling the oil company; I was CFO, and the day that we sold the assets, I called [Democratic consultant] Jason Stanford. I didn’t want to slow down for even one second.

How did you know Jason?

I read about him in the newspaper. In the article where they said there aren’t any Democrats, it was Jason who commented. It said “There aren’t any Democrats, and here’s why,” and so I called him and said “I’ll do it!” Anyway, so that leads us to the present. Somebody has to come in and do this. It’s a very, very worthwhile experience. My interest has expanded beyond just education. That was my initial impulse, but I’ve studied the state and discovered other things that need to be worked on. We’re falling behind on transportation; the business community is very concerned about that. Water, obviously, is on everybody’s mind. I also discovered in analyzing our state that we are on the cusp of becoming addicted to debt. It affects governments everywhere, and we’re not immune. Nobody’s talking about it. It feels like a very important mission.

What I’ve been surprised by in the past two years is how much farther right the state has gotten, even compared to someone like Rick Perry, who has, I think, been conservative by any normal standard. When Combs came back in 2013 reporting an $8.8 billion surplus—to me, that was a red flag that we cut the schools budget $5 billion by accident in 2011, or perhaps not by accident; perhaps in an abundance of caution that should raise some eyebrows.

Here’s my perspective on that. When the Eighty-second Legislature sat in January 2011, she showed up with a Biennial Revenue Estimate that showed a deficit that surprised everybody. It should have been a red flag to everybody: maybe this estimate isn’t right. If you look at the state’s economy, even in the document itself where she transmits the news, page 1 says we’re going to have less in revenues, which leads to the deficit. Page 2 says the good news is that we grew in 2010 and we’re going to grow in 2011 and we’re going to grow in 2012 and we’re going to grow in 2013. Anybody with any finance sense should have said, “There’s something really wrong here.” And my opponent didn’t say, “I think there’s something wrong here.” I’ve gone back and looked at the revenues coming into the treasury at the time. If you did a quarter on quarter analysis—this past quarter versus a year ago—you would have seen that revenues were roaring in. She should have at least stopped and said, “How do we manage our way through this uncertainty?” I think it was politics, and unacceptable.

I tend to agree with that, although within the Lege, I think there were people on both sides who were trying to maneuver their way through it, because they were logistically constrained by what the comptroller had projected, or maybe they were politically constrained. So they wrote a budget knowing they would backfill the budget. But there were also some who genuinely didn’t understand, and maybe some who felt genuinely cautious because it’s better to have a surplus than a shortfall.

You know, Erica, what I think this all boils down to is that if you’re a politician, you struggle with all the political implications of what you do. But if you’re a chief financial officer and you’re not a politician, it suddenly becomes very simple. You think of it the way a real executive would think of it and say, “These are the numbers; these are the uncertainties; these are the possibilities.” You don’t have to go through all of that political stuff. But you have to have a comptroller who’s not a politician to do that. And that’s, I think, what makes this so compelling to Texas voters. When I tell the story, the response I get—this whole notion of what party am I running for—just dissolves when I tell that story.

Do you feel like a partisan?

I’m so analytical it’s impossible to be partisan. I’m very analytical. I’ll say this, though. If I think about the five things that have to get done all at once when it comes to money: We have to fund education, and in my opinion, we aren’t funding it enough. We have to fund transportation, and we’re off the pace in terms of mobility. We have to fund water, which we’re not doing enough of. We must not become addicted to debt. As I mentioned earlier, we’re on the cusp of addiction, and now is the time to fix it. And we must not raise taxes. So that’s the aspiration, and there’s really nothing partisan in there, I don’t think.

Yeah, it doesn’t sound very left-wing. As far as the taxes, do you think there’s room in the existing revenue streams to fund those priorities you mentioned—education, roads, water—without raising taxes?

I think so, in terms of several things. If you think about how we forecast revenues, the chief financial officer has to forecast out not just two years, for the biennium, but the back half of the biennium now, so three years. And you can see that we haven’t forecasted those revenues properly, so we have big surpluses that are piling up at the same time that we can’t seem to fund these other things. And so that tells me that if we had better precision around forecasting, we would be in better position to deploy these revenues and make those investments. So that’s point number one.

Point number two is the opposite side of all this, which are the performance reviews. Where are we wasting money on things that aren’t strategic? I suspect that there’s a lot to be done there, because the performance reviews haven’t really been done independently by a comptroller, they’ve been in the Legislative Budget Board.

Are you there any areas you’d want to review first?

No. I’m not close enough to it yet to say. I do know this, though—it was taken away from [former comptroller Carol] Strayhorn McClellan, because she was political. My understanding is that she picked projects that resulted in headlines for herself. I don’t aspire to that at all. I would approach it the way a CFO approaches it, which is: Where do you get the most and best results for your effort? I think in education, for example—we’re going to ask Texans to increase funding in education. It’s the appropriate thing to ask them to do. But then they’re asking back, “How do I know it’s not a big waste?” And so until you can satisfy them that the school districts aren’t wasting it, that it’s going to the kids, there’s a natural reluctance to increase spending. The corollary is if you can look ’em in the eye and say, “This money is going to the kids”—by that I mean teacher compensation, classroom size, specialists, in-classroom programs that touch the kids—if you look ’em in the eye and say, “Look, this money is being spent very wisely, for the kids,” then they’ll be much more receptive to increases for funding in education. Beyond that, I’m not close enough to predict where the money will go. But it won’t be political.

And then the third thing is the tax gap. If the Constitution and legislation says that these taxes are okay, the comptroller’s office has got to go after them and make sure that people pay those taxes. If the laws are on the book to collect taxes—I’m pro-business through and through, but you gotta collect the taxes per the law, whether you like it or not. There’s a very large gap in property taxes. There’s a loophole, and it’s big enough to drive a truck through it, if you’re a big business and you got attorneys. And they have driven a truck through it, they’ve shaved their tax bill down down down down down. It’s been a problem that’s been festering for more than ten years. It was calculated in 2006 that we’re missing $4 billion in revenues, and for every dollar that somebody wiggles out of, it’s a dollar that the rest of us have to pay. It’s very unfair. So we have to go after that. It’s the only fair way to approach it, and there’s a big number buried, I think, in the tax gap. So when you put all three together, I think we have enough revenues to fund this.

Would you support annual budgeting sessions?

[Shakes his head.] The fact that the Legislature shows up every other year is something that we all value as Texans. I’d be delighted if Washington would adopt that. We do have to recognize that if they turn up every other year, it makes the forecasting that much harder, and I keep coming back to, so, let’s make sure we have somebody who can get it right. I think I’m qualified to do that. But then there’s a structural thing which is to update the forecasts every quarter, because if you update them every quarter, it does two very powerful things. One, it makes it impossible to bake politics into it. You can’t bake politics into it if you have to come back every quarter and adjust it. And then second, it changes the information flow to the Legislature—better numbers, more timely basis, better decisions. Let’s try that and see what the possibilities are.

Beyond not raising taxes, is there anywhere you’d like to see tax relief?

It’s tempting to think in terms of tax relief, because there are surpluses. The way a CFO looks at things, once you’ve made the investment in education, roads, water, and looked at our debt—let’s make sure, you know, that we’re not taking on too much debt—if you look at all those things and then you have money left over, then and only then do you consider tax relief. To do otherwise would be to basically hand this debt to our children and put the cash in our own pockets, and that’s just so unfair.

Have you run into voters who have been following this right-wing argument about how state spending has ballooned so much that it’s a California-style spending spree, and have you found it easy to counter that?

I have. I was with a really tough audience about a week ago, saying that all government is bad, demanding that all government spending should be cut, as a prelude to the conversation we were going to have. I said, “Well, complete this following sentence for me: The thing I love about Texas is small government and—how about great schools?” And they said, “Well, I agree with you there.” I said, “How about the thing I love about Texas is small government and great roads?” “Well, I agree with you there.” Even the hardest audience responds to the idea that if it’s a strategic investment that we need to make, let’s go ahead and make it. If you take the time to really just look at the facts and do the analysis, Texans are far more likely to agree on these things than to disagree. This is what I do for a living, is bring these facts to decision-makers. A chief financial officer who’s not a politician—I think it’d be very useful. The alternative is to install another entrenched politician, which I think is a bad decision.

This interview has been edited and abridged.

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