Assuming that one acknowledges the oft-proved fact that stocks go down as well as up, two Constitutional Amendments on the 2002 Montana election ballot—C-36 and C-39, which deal with whether the Montana Board of Investments should be given power to invest public government funds in private stocks—are misleading. The misinformation is woven into the ballot language describing the amendment to voters: “If the Montana Board of Investments had the option of investing public funds in common stock, the total return on public funds invested would increase.” The word “would” is of particular significance, being, as it is, a statement of future fact.
“Well,” says Dave Ewer, Research Manager for Equities at the Montana State Board of Investments in Helena, “it’s not a fact, is it?”
In fact, one of the most basic tenets of stock investment is that it involves risk. Just ask anyone whose 401(k) went down with Enron. Still, amendments 36 and 39 speak of investment only in terms of a “total return,” an amount which, voters are instructed,“would increase.”
Asked by the Independent whether the ballot’s “would” constitutes fact or speculation, Secretary of State Bob Brown—whose office oversees statewide elections—was instantly aware of the confusion.
“I guess I need to be careful about what I tell you here, because this could be the subject of litigation,” Brown said.
Oversight of ballot proposal language is the responsibility of the attorney general’s office, and assistant AG Pam Bucy acknowledges that the language of C-36 and 39 is probably inaccurate.
“It might be my fault. Seven lawyers reviewed this. Maybe we should have caught it,” Bucy said.
Still, the blame cannot rest solely on the attorney general’s office, which relies on the Office of Budget and Program Planning (OBPP) to deliver judgement on the financial impact of all proposals.
“We do the wording on the fiscal note,” confirms OBPP Director Chuck Swysgood. “All we do is what the fiscal impact is one way or the other.”
While Bucy admits to her office’s oversight, she also notes that neither she nor her fellow assistant attorneys general claim to be financial experts. As director of the OBBP, on the other hand, Chuck Swysgood does qualify as a financial expert, and as the author of the fiscal note to the attorney general, it is, by law, his responsibility to ensure that the statements within are accurate.
“What I would like to hear from the budget office is if there’s a possibility that that could be wrong,” Bucy said. “It seems like there’s a possibility that that word could be wrong.”
Swysgood admits the possibility. Asked if the stocks might just as well go down as up if invested in, say, WorldCom, Swysgood answers “Well sure, and so could the bond pool.”
To the question of whether or not that means stock money could, at least in theory, be lost, he replies “Yes, but if it’s widespread over a number of stocks, then the losses and gains are based on the average, and the Board of Investments is responsible for giving us that information.”
But Ewer still questions the ballot language, even if it is based on information from his own office. Raising his concern as a private citizen, rather than a state employee, Ewer says “It’s biased in my opinion. It may well hold true, but to say it as fact is wrong. You can say that, over history, stocks have performed in a certain manner, as have bonds. But, no, it’s not a fact.”