Truth Needle: A television ad that accuses gubernatorial candidate Jay Inslee of proposing to invest state pension money in startup companies has an element of truth to it, but it misleads viewers by not saying Inslee quickly dropped the idea.
The claim: The Republican Governors Association is running an ad that opens with footage of firefighters and comments from a “first responder” who tells viewers that she knew her job was dangerous when she signed up for it. The ad then veers into a claim that Democratic gubernatorial candidate Jay Inslee “proposed a risky plan to invest the state’s pension plans in startup companies, putting the retirement of our first responders and their families at risk.” The ad ends with the firefighter telling viewers that she “didn’t sign up for that.”
What we found: Mostly false.
This ad refers to a proposal that Inslee floated and then quickly withdrew more than a year ago, so whatever risk the ad refers to is a moot point.
Some background: When Inslee announced his candidacy in June 2011, he noted that businesses had an easier time obtaining startup capital in California than in Washington, and he proposed that the state help fill the gap.
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“We need to find a way to get startup capital for these new innovators,” he said. “And, that’s why, when I am governor, I will propose using a small, defined portion of our state pension funds to create a pool of capital available for startup, innovative companies that pledge to start here, and pledge to stay here.”
The state pension fund is valued at about $61 billion, and about $16 billion of that is invested in private equity funds. Inslee told The Seattle Times last year that he wanted to increase the share of private equity funds invested in Washington businesses from 1.4 percent to just over 2 percent. That would have funneled an additional $96 million to Washington startups involved with such things as biofuels or high technology.
Some businesses endorsed the idea, but Inslee’s Republican challenger, Rob McKenna, dismissed it as too risky. He told reporters that he had “looked at the idea, as has the state investment board, but this is simply not the proper use of these funds.”
Washington’s state investment board has a legal obligation to maximize returns on its investments, and generally expects its pension fund investments to return at least 8 percent annually.
Within weeks of the announcement, Inslee withdrew the proposal. When it came up again in June at a debate in Spokane, he repeated that he had withdrawn the idea because it had “caused some concern to people.”
“I am not proposing and will not propose changes to our investment of our pension system,” he said at the debate.
The ad’s claim that the proposal would put the retirement of first responders and their families at risk is difficult to gauge, but the state investment board agreed that investing in local startup businesses carries a higher risk. In a white paper written two years ago, the board’s investment director noted that investments other states made in local businesses, including real estate and banking, have performed poorly.
It’s worth noting that Patricia L. Mann, the Seattle Fire Department firefighter/paramedic featured in the ad, was among a slate of Bellevue City Council candidates who ran with the backing of developer and Republican stalwart Kemper Freeman. Last week, the president of the Washington State Council of Fire Fighters released a Web video defending Inslee, and reminding voters that the council has endorsed the former congressman.
So, while it’s true that Inslee proposed using state pension funds to invest in startups, the ad leaves viewers with the incorrect impression that he is still advocating that, even though he withdrew the proposal.
Because the claim contains an element of truth, but ignores facts that would lead to a different impression, we find the statement to be mostly false.
This story includes information from The Seattle Times archives.
Susan Kelleher: 206-464-2508 or firstname.lastname@example.org. On Twitter @susankelleher.