- Associated Press - Sunday, March 2, 2014

FRANKFORT, Ky. (AP) - Targeting a Democratic stronghold, the Republican-controlled Kentucky Senate wants to send voters a constitutional amendment to abolish the position of state treasurer, a job that has existed since its creation in the state constitution in 1792.

Whether voters get to decide the office’s fate could depend on how attached to the office the state’s top Democrats feel. Though Gov. Steve Beshear doesn’t see the issue making it through the General Assembly, House Speaker Greg Stumbo doesn’t sound at all inclined to keep that from happening.

“They don’t do anything except sign checks,” said Stumbo, D-Prestonburg, said of the treasurer’s office.

In Fiscal Year 2013, the state treasury printed and dispersed 3.1 million paper checks, totaling more than $8.2 billion in receipts. The treasurer is also responsible for managing $27 billion in federal electronic wire transfers annually, tracking court-ordered withholdings and garnishments for state employees, filing taxes for state government, and reconciling 26 central bank accounts in order to maintain the state’s credit rating nationally.

“It’s a pretty antiquated office,” said Sen. Christian McDaniel, R-Taylor Mill, who sponsored the bill that passed the Senate on Feb. 4 and would place the treasury under the management of a gubernatorial appointee, with additional duties going to the state auditor.

Current Treasurer Todd Hollenbach would be allowed to fulfill his current term, his second, after which he already cannot run for re-election due to term limits. Though Democrats have rarely parlayed the position into higher office - former Lieutenant Gov. Thelma Stovall was once treasurer, but Hollenbach claims no such aspirations - the party has owned it for years, and it is widely considered unwinnable for Republicans.

The treasurer’s office also administers the state’s unclaimed property fund - currently $150 million and growing by $7 million annually - which aims to return tax refunds, payroll checks and other assets to residents. If the owners don’t come forward within a certain period, their money becomes the state’s through a practice known as escheatment.

Since Hollenbach was elected in 2007, payouts from the unclaimed property fund have soared. The Revenue Cabinet controlled unclaimed property between 1984 and 1993. During that time, $4.8 million was returned to Kentuckians. Hollenbach’s office has returned nearly 25 times that amount to residents, for a total of nearly $96.3 million as of Jan. 1.

That means far fewer dollars winding up in state coffers, however.

“The money we aren’t able to return to its rightful owners gets deposited in the general fund,” Hollenbach said. “In other states in the past, legislatures have made it difficult for unclaimed property programs to return those funds to individuals.”

The Kentucky bill cleared the Senate despite Democrats’ concerns about another duty of the treasurer: In the event of a budget impasse, the treasurer ensures that only legislatively authorized funds are spent.

“If you house that function in an administrative office of the executive branch, that certainly seems like the fox guarding the hen house,” said Minority Floor Leader R.J. Palmer, D-Winchester.

Majority Floor Leader Damon Thayer, R-Georgetown, dismissed those concerns, saying that “the treasurer is not elected in most states.”

In fact, 40 of 50 states have an elected position called or comparable to a treasurer in duties, according to the Council of State Governments and the National Association of State Treasurers. The other states allow the governor to appoint a treasurer or its equivalent.

Only Minnesota has made the transition that Kentucky is considering - ditching an elected treasurer in favor of allowing the governor to appoint one.

McDaniel and co-sponsors, Thayer and Sen. Joe Bowen, R-Owensboro, say that removing the office could save the Commonwealth $1.4 million annually, with most of that coming from staff cuts.

However, 11 of the 33 employees would be retained under the Finance and Administration Cabinet. Their salaries and benefits comprise $747,434 of the current treasurer’s budget, meaning the savings would be less than half of the figure that Senate sponsors cited.

Beshear considers the bill little more than a partisan ploy, and called it curious that GOP lawmakers targeted Hollenbach’s post instead of another elected position consistently held by Republicans.

“I’m not sure why they simply pick out the office of treasurer as opposed to agriculture commissioner,” said Beshear, who would have the option of a veto if Democrats in the House allow the bill to go through, “but I don’t really see that issue as ending up getting on the ballot.”

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