SPRINGFIELD -- In Illinois, the role of state treasurer is that of chief investment officer.
Treasurer Michael Frerichs has held that position for two full terms, winning by fewer than 10,000 votes in 2014 before cruising to an 18 percentage-point victory in 2018.
He boasts that Illinois has topped $1.2 billion in interest gains on its investments since he took office, making him just the second treasurer since Republican Judy Baar Topinka, who held that post from 1995 through 2007, to reach that threshold.
"We've raised more than a billion dollars for the state of Illinois," he said in a podcast interview with Capitol News Illinois. "A billion dollars that didn't have to be raised in taxes or a billion dollars in cuts that didn't have to be made to things like our schools, our roads and bridges."
He said the treasurer's office invests about $26 billion in state funds, about $15 billion in pooled municipal assets and administers a college savings program through which Illinoisans have saved almost $17 billion, among other tasks.
His opponent is state Rep. Tom Demmer, a Republican from Dixon who has served in the General Assembly since 2013 and is currently House deputy minority leader. He's the House Republicans' point person on budget issues.
Demmer said his focus is on adding a Republican check on Democratic power among the state's constitutional officers -- governor, comptroller, attorney general, secretary of state and treasurer -- all of which are currently held by Democrats, although all will be up for vote in November.
"When you have one party in control of really every aspect of government, sometimes folks in the office, they don't have an incentive to speak up," Demmer told Capitol News Illinois. "They don't want to rock the boat. They don't want to try to hold somebody else accountable, because they're in the same party, and they don't want to ruffle any feathers. That's not how our government is set up to work."
Frerichs pointed to his office's efforts to increase transparency through "The Vault," an online portal through which Illinoisans can find analysis from the office as well as information on the state's investments and borrowing.
"So he says the office should be a check and balance between the governor and the General Assembly but ignores the fact that we already do so through examples such as co-signing bonding agreements to make infrastructure improvements possible, guiding the General Assembly as it creates new programs, such as the Secure Choice Retirement Savings Program," Frerichs said.
While the treasurer plays no official role in setting tax policy for the state, Demmer's most frequent criticism of Frerichs is in regard to a graduated income tax amendment Frerichs supported that would have raised the rates for high-income earners but was rejected by voters in 2020.
Frerichs made a comment at a forum in 2020 in which he said a graduated income tax could allow for a broader conversation about taxing high levels of retirement income.
"Treasurer Frerichs can go out and make the case for why we should tax retirement income, I'll make the case for why we shouldn't tax retirement income," Demmer said.
Frerichs has consistently said he doesn't support a retirement tax.
He said he made the 2020 comment in a discussion with the Illinois Chamber of Commerce President Todd Maisch at a forum to debate the graduated income tax. Frerichs said he was trying to convey that he doesn't support a retirement tax, but anybody looking to tax pensions should support a graduated tax structure which would allow for taxation only on higher levels of income, rather than the flat rate required under current law.
"I have been very clear, and my opponent knows this, that I didn't support a retirement tax. I don't support a retirement tax, and I will not support a tax on retirement," he said, claiming Demmer repeats the claim to distract from his anti-abortion record and placement on a Republican ticket topped by controversial candidate Darren Bailey.
Demmer would prefer not to talk about Bailey. There's been no endorsement either way, although in a news conference earlier this year, Demmer said he believed Bailey would make a good governor.
"We've tried to build a plan that's very focused on issues of taxes and spending of dollars and cents," Demmer said. "And so, you know, trying to cut through some of the rest of the clutter that comes out there, just by having a very straightforward message."
Demmer was among a slate of candidates backed in the Republican primary by megadonor Ken Griffin. Those included Aurora Mayor Richard Irvin for governor, John Milhiser for secretary of state and Steve Kim for attorney general -- all of whom lost in the primaries.
Demmer and comptroller candidate Shannon Teresi both ran unopposed in the primary and were the only candidates in the slate that made the general election ballot. But the $50 million Griffin gave to Irvin hasn't trickled down.
That's left Demmer behind in fundraising. His campaign fund had a balance of $465,000 as of June 30, and he reported raising about $68,000 since then.
Frerichs, meanwhile, had $2 million in the bank on June 30 and has raised at least $360,000 since then, with hundreds of thousands of dollars coming from labor unions.
While Demmer downplayed the gap between the candidates and attributed it to the challenges of fundraising in general, Frerichs said fundraising is easier for him due to his success in office.
Frerichs also touted his management of the Bright Start 529 college savings plan, which has been gold-rated by the financial services firm Morningstar. It's managed by an outside partner and frequently outperforms the market, Frerichs said, although over the past year many plans within the program have seen negative returns.
In 2016 and 2017, his office hired a new investment manager for the fund that offered more plans and lower fees, he said, creating savings for those participating in the plan.
"The funded plans grew from 387,000, valued about $7 billion (in 2015), to 824,000, valued at over $16 billion (in 2022)," he said.
Demmer said his proudest accomplishments in the General Assembly came as a member of the unofficial bipartisan working group that negotiated Medicaid policies.
"It's a key area where we have to be sure that when we're making a promise that we can afford to keep it," he said regarding the state's administration of the health care program. "And so, working on those bills year after year, having direct input into what was in those bills and what wasn't, was something I've been really proud of, and I think is a tribute to what can be done when there's an opportunity to work in a bipartisan way."
Demmer is the sponsor of a bill in the General Assembly that would put a constitutional amendment to voters to merge the comptroller's and treasurer's offices. Demmer said that could create about $10 million in taxpayer savings.
It's something both Frerichs and Demmer supported, although Comptroller Susana Mendoza called it a bad idea that comes up only in election years. She said the 1970 constitution separated the investment and fiscal offers to create a safeguard against fraud.
"Because back in 1956, Orville Hodge, who did the combined job of treasurer, comptroller and auditor, embezzled $6 million, which today would be the equivalent of about $59 million," Mendoza said. "And that's why in 1970, the legislature decided to split the duties ... and never allow something like this to happen where the person who invests the money also has access to the checkbook."
Demmer's proposal would need approval from three-fifths of both houses of the General Assembly before appearing on the ballot for voters, making it a longshot to actually become law.