Stratton: Hedge funds work for Arizona

Posted 7/22/21

In a state as big as Arizona, it’s no surprise that our communities have different needs. But there are some constants.

No matter where we live, we’re all concerned about our …

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Stratton: Hedge funds work for Arizona


In a state as big as Arizona, it’s no surprise that our communities have different needs. But there are some constants.

No matter where we live, we’re all concerned about our financial security. We want our kids to have access to high quality education. And we want to support the communities we call home.

Unfortunately, some lawmakers in Washington D.C. have embraced harmful new policies that could threaten the threads that run through every family and community in our state.

These lawmakers have taken aim at hedge funds, and they’ve done it at the worst possible time. This past year has seen everyone affected, in one way or another, by COVID-19. Its effects have hit our state’s economy hard, leaving many in a financial strain.

As we begin to recover from the economic downturn, we must avoid any policy proposals that needlessly burden Arizonans and threaten their security.

Unfortunately, that’s exactly what Washington is doing when they target hedge funds, a misunderstood but vitally important component of our economy.

Hedge funds work to provide retirement security to millions of retirees, including those residing in Arizona, as well as charitable foundations, and university endowments. They do so by utilizing smart and sophisticated investment strategies to grow and diversify market portfolios of pensions, non-profits, and scholarship funds.

These returns are passed on to their beneficiaries: retirees, college students, and organizations working in Arizona communities. Punitive tax policies that target hedge funds directly threaten these beneficiaries. If hedge funds are held up by bureaucratic red tape, Americans and Arizonans alike will suffer the consequences.

All of our public employees including firefighter and law enforcement officers, rely on their pensions for financial stability after their careers are over. At least 12 pension systems in Arizona invest in hedge funds, including some of the state’s widest-reaching retirement programs.

The Arizona Public Safety Personnel Retirement System invests $1.58 billion for 34,448 plan participants, which includes our state’s first-line responders and heroes. The city of Phoenix Employees’ Retirement System invests $615 million for 16,325 plan participants. Simply put, these pension funds would not be able to provide for retirees if hedge funds didn’t wisely manage and grow their money.

Arizona colleges and charities are also heavily invested in hedge funds. Arizona State University, one of the largest higher education institutions in the country, invests $262 million in hedge funds. Returns on those investments contribute directly to scholarships and financial aid for 45,918 students. The Helios Education Foundation, a prolific Arizona non-profit, invests $158 million in hedge funds.

As a longtime resident, lawyer and small business owner, I’ve seen firsthand the effects bad fiscal policy has on working people.

It’s a shame that some of our nation’s lawmakers fail to understand this and want to tax on hedge funds in the hopes of raising money for their own pet political projects. But targeting hedge funds won’t raise any money, it will only hurt our state’s retirees, college students, and organizations making a difference in our communities.

Lawmakers in Washington should reject these policies outright. A tax on hedge funds is a tax on retirement savings for first responders, it’s a tax on education, and it’s a tax on charitable organizations. It results in less money for Arizona and it’s bad for Arizona families.

Editor’s Note: Tim Stratton is a Scottsdale resident, government finance expert, attorney, small business owner and currently serves on the City Scottsdale Board of Zoning Adjustment. Tim is also the former Chair of the City of Scottsdale IDA and currently serves as a member of the State Board of Charter Schools and was appointed to that body by the governor and confirmed by the Arizona Senate.