DALLAS -- Texas lawmakers will consider three proposed joint resolutions that call for a constitutional amendment to abolish the state Treasury and shift the responsibilities to the comptroller's office when the state legislature convenes next month.
In recent weeks, three Texas legislators have filed three separate resolutions to ask voters in the November 1995 election to approve an amendment to the state's constitution and eliminate the state Treasury by 1999 or thereafter.
The proposals are expected to gain widespread support because proponents claim that abolishing the Treasury would save Texas taxpayers more than $7 million annually and reduce the state bureaucracy.
"I absolutely think it will pass," said Texas Treasurer Martha Whitehead. "If not, the legislators will face a tremendous backlash from the public when they come up for reelection."
Whitehead, who ran for election in November on the platform of abolishing the agency and won by a narrow margin, said her move to reduce state bureaucracy has garnered strong public support.
"I intend to be the last treasurer in Texas," she said. "I have said this will be accomplished during my four-year term."
The three resolutions to eliminate the Treasury are almost identical, legislative sources said. All resolutions would require a two-thirds vote in both houses of the legislature after it convenes Jan. 10 for them to appear on the November 1995 statewide ballot.
The main differences among the resolutions is when state legislators would draft and discuss a bill on the details of the consolidation of the Treasury and comptroller's office.
Two of the three resolutions filed -- Senate Joint Resolution 16 by state Sen. Rodney Ellis, D-Houston, and House Joint Resolution 25 by state Rep. Mark Stiles, D-Beaumont -- call for the details to be worked out when lawmakers convene in 1997.
"We want to see if it is what the voters want before we file legislation to take care of all of the details," said Cheryl Vanek, a spokeswoman for Stiles.
Ellis said he thinks the time is needed to provide for an orderly transfer of power. "We are talking about a major change by abolishing an office created over a century ago," he said.
Ellis believes the amendment will pass. "I am convinced there is a tremendous amount of support from the voters," he said.
In contrast to the Ellis proposal, Rep. Bill Siebert, R-San Antonio, has filed House Joint Resolution 15 that asks for most of the same things, but the deadline for the elimination of the Treasury is 2004 and the enabling legislation would be drafted this year.
Siebert spokesman Andrew Erben said shell legislation has been drafted and is being used as a placeholder until a detailed bill can be presented in late January.
The shell legislation provides "a broad outline that basically transfers all powers to the comptroller's office," Erben said. "The other would get down to the nuts and bolts."
In general, Whitehead and Texas Comptroller John Sharp have been pushing for the consolidation to cut costs in state government and increase efficiency.
"Texas taxpayers should not have to foot the bill for waste and duplication in Austin," Whitehead said. "There is no reason for them to suffer the burden of an entire state agency when we can move or privatize the necessary functions the Treasury performs."
The Democratic treasurer estimates the agency can save three of four administrative dollars spent by eliminating duplication in staff functions and cutting other costs. The agency has an annual administrative budget of about $11 million and employs about 260 workers.
However, Austin banker David Hartman, Whitehead's Republican opponent who lost by a narrow margin, called the abolition of the Treasury a poor idea. He said officials have never justified the cost savings and increased efficiencies.
In addition, Hartman said the consolidation eliminates the necessary checks and balances between the comptroller's and treasurer's offices. "It's kind of a power grab," he said. "It's another chapter in smoke and mirrors by Mr. Sharp."
In Sharp's recent report, "Gaining Ground," which recommends various cost-saving measures for the state, he said the comptroller's office should absorb the Treasury's responsibilities for unclaimed property administration, cash and securities management, and accounting and information resource duties.
"Merging the Treasury's basic administrative functions into the Comptroller's office would eliminate duplicative overhead expenses," the report said.
In addition, the report recommends that some parts of the Treasury's investment portfolio could be allocated to professional, private-sector money managers.
"Privatizing some portions of the portfolio management could in some cases increase the income without jeopardizing the two priorities of the Treasury's investment strategy: safety and liquidity," the report said.
"Investment operations would shift from actually making all the state's investments to monitoring money managers. The increased yield should more than offset expenses, thereby allowing a decrease in investment staff at the Treasury," the report continued.
Several industry sources said the move to privatize TexPool, an investment pool for local governments run by the state Treasury, could gain much support among both political and business leaders.
In recent months, TexPool has received much competition from private investment pools that have sprung up during the past several years and has faced withdrawals by a number of government agencies.
Exacerbating the situation was a recent run on the pool, triggered by the investment crisis in Orange County, Calif., and media reports on TexPool that drew what state Treasury officials said were some unwarranted comparisons between TexPool and the Orange County investment pool.
The run drained more than $2 billion from TexPool starting Dec. 9 and ending Dec. 19. TexPool was left with about $1.5 billion in assets compared with about $3.6 billion when the run started and down substantially from the peak of about $11 billion earlier this year.
Faced with that kind of backdrop as well as earlier problems, industry and political observers expect a push to privatize the pool.
"I have a knee-jerk instinct that makes me want to privatize what we can," Ellis, who is a Houston investment banker as well as a state senator, said in early December. "We certainly should be concerned about TexPool."
Treasury officials have repeatedly assured investors of the safety and liquidity of the pool, and rating agencies also have showed support for the Treasury's move to cover all withdrawals.
However, while many believe TexPool will survive, they said it is likely to do so at a reduced level and then face a push to be privatized later.
"I think it will be debated on the floor of the House and the Senate," Siebert spokesman Erben said. "It definitely will be the hot topic."
He said Siebert has talked to the treasurer's and comptroller's offices about privatizing Texpool. "I have a feeling that we will suggest that some functions be privatized."
Whatever the case, the privatization as part of the abolition of the treasurer's office is at least several years away because many steps would have to be taken to approve and execute the constitutional change.
"It may take some time, but the proposal seems to have the support of both sides of the aisle," said one industry observer.
