Office of the Vermont State Treasurer - Executive Office: Press Release Archive For 2001

MONTPELIER &150; State Treasurer James H. Douglas says that all state agencies should be permitted to accept payments by credit card. Currently only a few selected departments have that authority.

"We've got to get with the times," says Douglas. "If we're going to be ready to enter the era of electronic government, a basic first step is the use of credit cards for fees, fines and other payments."

The Treasurer endorsed a bill to accomplish this that was introduced last week by Representatives Kathleen Keenan and Mark Young. "Vermonters are becoming increasingly sophisticated and more accustomed to transactions over the worldwide web," said Douglas. "More of our receipts and payments are being handled electronically. We should make dealing with state government as easy as possible."

The Treasurer noted that a recent study by the National Electronic Commerce Coordinating Council reported that most states accept credit card payments for at least some purposes.

TREASURER: HONEY, THEY SHRUNK THE TOBACCO PAYMENTS!

MONTPELIER – State Treasurer James H. Douglas says that the payments to the State from the 1998 national tobacco settlement are continuing to shrink. "I expect to receive about $5 ½ million less this year than originally projected," he said.

The payments, received twice each year in January and April, are reduced as the total volume of tobacco product sales declines nationwide. Last year's amount was 14% less than anticipated and this year it dropped another 1%, according to the Treasurer.

Douglas says that an additional $1.4 million has been withheld because the State failed to enact a model law by a deadline established by the settlement. This provision would have allowed the State to require smaller tobacco manufacturers that were not parties to the original agreement to place funds in escrow if the settling companies could show they lost market share to those companies. Fifteen other states are affected by this adjustment; all have appealed the determination to an arbitration panel.

"We expected $28.5 million this year," said Douglas. "Now it looks like we'll receive about $23 million. The State should not rely on such an uncertain revenue stream for ongoing programs. I renew my recommendation that all payments be placed in a perpetuating trust and that only the income from the trust be spent. Although less would be available in the early years, it would ensure a permanent source of revenue."

TRAIN SERVICE: ON TRACK FOR VERMONT?

MONTPELIER – Vermont State Treasurer James Douglas and several key legislators met Friday with senior Amtrak officials and state leaders from across the Northeast to discuss Amtrak service in the region. The meeting was sponsored by the Council of State Governments' Eastern Regional Conference and was held at Amtrak's Northeast Corridor Headquarters in Philadelphia.

"I am committed to ensuring that Amtrak addresses Vermont's needs as it plans its service for the region," Douglas said. "Our voice needs to be heard on issues like quality service, speed, upgrading current routes, and developing new services outside of the Washington-Boston corridor."

The officials were briefed on the new high-speed Acela Service, Amtrak's strategic business and capital plans, and federally designated high-speed corridors. Also attending were Rep. Richard Pembroke, Chair of the House Transportation Committee; Sen. Robert Ide, Vice Chair of the Senate Transportation Committee; and Sen. William Doyle, Chair of the Senate Government Operations Committee.

As the Northeast's airports and highways become increasingly congested, Douglas and other state officials said they are pushing Amtrak to provide attractive transportation alternatives. With Amtrak facing mounting pressure from Congress to cut costs and address its operating deficit, Douglas said that strong regional advocacy is needed now more than ever.

"Vermont and the Northeast as a whole needs a strong high-speed passenger rail system if we are going to remain competitive," Douglas said. "It's important that we are part of Amtrak's planning process."

The Council of State Governments (CSG) is the nation's oldest organization of states and the only one representing the executive, legislative, and judicial branches. CSG's Eastern Regional Conference includes the 10 Northeast states between Delaware and Maine. CSG/ERC actively supports appropriate funding for Amtrak and a strong regional voice in Amtrak planning.

BOND BANK SALE A SUCCESS

MONTPELIER – State Treasurer James H. Douglas announced today that the Vermont Municipal Bond Bank has completed its bond sale for 2001 of $38.5 million. The Bond Bank traditionally sells its bonds in June or July and this year was able to take advantage of the low interest rate environment and obtain the lowest overall rates in over twenty years. When the final numbers are compiled, Douglas said, all the bonds will likely have been sold to Vermont individual investors, which is consistent with the most recent bond issues.

The Treasurer noted that Moody's Investors Service upgraded its rating on the Bond Bank to Aa3 while Standard and Poor's confirmed its rating of A+. This year the Bond Bank added a rating from Fitch, which was AA+. The increase in ratings allowed the Bond Bank to require bond insurance for only the last 21 years of the 30-year issue and still have AAA insured interest rates for the entire issue.

The bonds were sold to finance 28 municipal projects including a new middle school in Bennington, water system improvements for the Champlain Water District, a new town garage in Lincoln, a new fire truck in Springfield and renovations to the Town Hall in Stannard. The various loans were pooled in one bond issue, which allowed the municipalities to take advantage of the Bond Bank's credit rating, experience and reputation in the municipal bond market.

Douglas said that the Bond Bank was established in 1970 to make it easier and more cost effective for Vermont's municipalities to gain access to the national capital market. To date, with this issue, the Bond Bank will have completed 37 bond issues totaling just over $1 billion.

DOUGLAS APPLAUDS GOVERNOR'S BUDGET ACTION

MONTPELIER – Vermont State Treasurer James H. Douglas supports Governor Dean's decision to order budget rescissions to prevent a shortfall by the end of the new fiscal year.

"We must ensure that the state avoids a deficit," Douglas said. "Early action was the right thing to do. Our strong commitment to responsible budgets has been recognized by four upgrades in our credit ratings in the last few years; we must continue our record of fiscal discipline."

The Treasurer added that he recommended a smaller general fund budget when it was presented to the legislature in January. "The fiscal 2002 budget proposal contained the largest increase in years, twice the rate of the state's economic growth. I urged the legislature to reduce it, which they did, the first time a governor's budget recommendation has been lowered in some time."

"I'm pleased that the Governor has acted," Douglas concluded, "but a smaller initial budget would have made these cutbacks unnecessary."

VERMONT WILL SELL BONDS THROUGH INTERNET

MONTPELIER – State Treasurer James H. Douglas announced today that Vermont will sell bonds electronically on Wednesday, October 31. The State will be accepting bids on $46 million of Vermont General Obligation Bonds at 11:00 a.m. over Parity, the primary vendor of electronic securities in the state and local government bond market.

"Electronic bidding really improves the efficiency of accepting competitive bids," said Douglas. "Now there is no need for faxes or physical delivery of the bid forms, and since the computer performs all the calculations, the sales force at the investment banks have extra time to sell the bonds prior to the bid. All of these factors help to keep the State's borrowing costs as low as possible."

According to Douglas, when the State last issued bonds two years ago, the technology for electronic bids was relatively primitive and the market had not embraced the practice. Since then, the technology has become much more 'user-friendly' and the number of borrowers receiving bids through the Internet has mushroomed. The Treasurer notes that Vermont will be among the first states in New England to use this process.

Generally the State receives four to six bids from major Wall Street firms for its bonds. The firm with the lowest interest cost wins, and is awarded all the bonds, which are then allocated to other firms for sale.

"We're in the 21^st Century," Douglas concluded. "We're going to use 21^st Century technology."

The media are welcome to observe the electronic bid process at the State Treasurer's office at 11:00 a.m., Wednesday, October 31.

VERMONT SELLS BONDS THROUGH INTERNET

MONTPELIER – State Treasurer James H. Douglas announced today that Vermont sold bonds electronically on Wednesday, October 31. The State issued $46 million of Vermont General Obligation Bonds to finance capital projects authorized by this year's legislative session. "We got a great deal," said Douglas. "The average interest rate is 4.276%, more than a full per cent below our last issue.

"We received eight bids, which is more than usual," the Treasurer explained. "That competition, coupled with a favorable market environment and the efficiency of electronic bidding, made for a successful sale."

The bonds were sold through Parity, the primary vendor of electronic securities in the state and local government bond market. "Electronic bidding really improves the efficiency of accepting competitive bids," said Douglas. "Now there is no need for faxes or physical delivery of the bid forms, and since the computer performs all the calculations, the sales force at the investment banks have extra time to sell the bonds prior to the bid. All of these factors help to keep the State's borrowing costs as low as possible."

According to Douglas, when the State last issued bonds two years ago, the technology for electronic bids was relatively primitive and the market had not embraced the practice. Since then, the technology has become much more 'user-friendly' and the number of borrowers receiving bids through the Internet has mushroomed. The Treasurer notes that Vermont is among the first states in New England to use this process.

Douglas added that Vermont will sell $5 million in Citizen Bonds in about a month. These are smaller denomination securities available only to Vermont residents.

VERMONT PENSION FUNDS IN GOOD SHAPE

MONTPELIER – State Treasurer James H. Douglas announced today that both the Vermont State Employees' and the Vermont State Teachers' pension systems achieved higher funding levels in fiscal year 2001. According to the State's actuary, the Employees' funding increased by 0.4% to 93% and the Teachers' increased by 0.1% to 89%. "These funding levels are strong," said Douglas. "Despite last year's downtown in the stock market, our systems are stronger than they've been in a decade. The pensions for our state employees and teachers are secure."

According to Douglas, each system has experienced an approximate 10% increase in funding level during the past five years; in 1997, each was in the low 80% range. The major reason behind this positive trend is the strong relative performance of the investments in the pension system portfolios. Although the bellwether S&P 500 Index ended the year with a decrease of 14.8%, the pension systems suffered a loss of only 3.7%. The State pension systems are long-term investors, the Treasurer noted, and for the five years ending June 30, 2001, the three systems had a combined total return of 11%, which was 0.4% ahead of the median public fund return of 10.6%.

Douglas said, "The out-performance of the pension systems is largely due to prudent investment management and a strict adherence to asset allocation strategies. When growth stocks were at their highest, the systems were taking profits and reinvesting the money in bonds. Now bonds are outperforming. The old adage, 'Buy low, sell high' still holds."

DOUGLAS ENDS YEAR AS HEAD OF TREASURERS' GROUP

MONTPELIER – State Treasurer James H. Douglas ends his year as President of the National Association of State Treasurers today, citing numerous successes for the organization during the past twelve months.

"NAST achieved one of our key Congressional objectives: tax exemption for earnings on qualified college savings plans. That means that the Vermont Higher Education Investment Plan, administered by VSAC, will be an even better way for Vermont families to save for college."

Douglas also noted that the National Association of Unclaimed Property Administrators became a NAST affiliate at the beginning of the year. "Reuniting owners with their abandoned property has been a priority of mine since becoming State Treasurer," he said. "I'm proud that Vermont has returned the highest percentage in the nation for three consecutive fiscal years. We now have a national database, with a majority of states participating, so those who have lived in other states can check for abandoned property outside Vermont."

NAST sponsored conferences and meetings on various topics during the year, including investing, public finance, debt issuance, college savings programs and unclaimed property, according to the Treasurer. "I'll never forget this year's annual conference: my colleagues and I were in New Mexico on September 11. It took most of us several extra days to return home."

Douglas turns the NAST presidency over to Georgia Treasurer W. Daniel Ebersole, who has served this past year as Senior Vice President of the Association.

IT'S ON EVERYONE'S HOLIDAY GIFT LIST AND NOW

VERMONT CITIZEN BONDS ARE AVAILABLE

MONTPELIER – If you want a holiday stocking stuffer, State Treasurer James H. Douglas has something for you: a Vermont Citizen Bond. Douglas announced today that $5 million of the popular Vermont Citizen Bonds are available for Vermont residents to purchase from local brokers throughout the State.

In previous offerings of Vermont Citizen Bonds, Vermonters quickly gobbled them up. Douglas expects the same to happen with this offering as well, especially since they all have short maturities ranging from 1 to 10 years. The bonds are offered only to Vermont residents in denominations as low as $1,000 instead of the more traditional $5,000 denominations. Interest on the bonds is paid semi-annually and principal will be paid on the date of maturity. Interest rates for the various maturities will be determined just before the bonds are placed on the market.

According to Douglas, the State of Vermont splits its bond issuance into two segments. The first segment is sold in New York and is purchased by one or more institutional investors. The State sold $46 million last month using the Internet, for the first time, to accept bids. The second segment, which is known as the Vermont Citizen Bond program, is sold to Vermont residents through a network of brokers located throughout the State. Vermont residents may call or visit the following brokers to purchase the bonds: Advest; A.G. Edwards; Morgan Stanley; Edward Jones; First Union; Merrill Lynch; Moors and Cabot; UBS Paine Webber and Salomon Smith Barney.

Douglas reiterated, "Call your broker now because these bonds will go fast. The purpose of the Vermont Citizen Bond program is to give Vermonters the opportunity to invest in Vermont at tax-free rates," Douglas said. "However, check with your broker, because, depending on income, tax free bonds may not be the best investment vehicle for some individuals."