Kest stresses money smarts gained from job experience

Ray Kest, 51, is on a mission to be mayor to complete a promising political career that was stalled seven years ago.

As the Lucas County Treasurer, Ray T. Kest has a considerable amount of autonomy -- and authority.

He's elected by the taxpayers, appoints his entire staff, and can't be fired because he's his own boss.

His job definition is simple, though the work itself is challenging enough, he said.

Mr. Kest collects property taxes. After the bills are paid, he invests what's left.

“He's the tax assessor and the bank. He holds all the money,” said Larry Kaczala, the county auditor, who, as Mr. Kest's bookkeeper, keeps an eye on the till.

“We write the checks and disperse the money,” said Mr. Kaczala, noting that $1 billion comes through the treasurer's office each year.

In his run for Toledo mayor, Mr. Kest repeatedly has stressed that the financial acumen he has gained from his 16 years as treasurer, coupled with his experience as a certified public accountant, make him the smart choice for the job.

Especially with an uncertain economy looming.

The question, some voters wonder, is how good he has been at his current post.

Not surprisingly, Mr. Kest, possessing an abundance of confidence, has the answer.

“I think this is the model [treasurer's] office in the state.”

By all accounts, he's been a superior treasurer. Delinquencies are down. Collections are up. Investments have been stellar, he said.

The problems have been in other areas.

By his own account, Mr. Kest, an admitted hands-off leader, has had shaky periods in the staff management department. For years his office was known as the place to be in county government for the best pay, most flexible hours, and laid-back, party atmosphere.

Mr. Kest admitted this but said things have changed.

At 51, there's little time for fun for the fun-loving Mr. Kest, who's running as an independent Democrat. He's on a mission to complete a promising political career that stalled seven years ago in a failed run for state auditor.

“I can retire in three years and live an easy life,” he told a group of ironworkers last week. “I don't need this job. But I want this job.”

Hearing Mr. Kest talk about retirement might shock some political observers who recall he was the youngest person ever elected to city council at age 25 in 1974. He went from there to the county commission and then was elected to the treasurer's office in 1984. He wasn't supposed to take office until September, 1985, but then-treasurer John McHugh resigned in March, 1985, and Mr. Kest, who had earned a master's of finance degree from the University of Toledo along with his CPA certificate, took over.

“I thought it would be a better fit,” he said of the move from county commissioner to treasurer.

He found an office that was understaffed, behind in its tax collections, and had made poor investments.

“It was just a revenue collection office of 20 people. Checks were sitting in the safe not deposited. No foreclosures had been filed at all in the previous two years. Tax delinquencies were at $45 million. I knew it was going to be a challenge,” he said.

Knowing that any policy changes in the treasurer's office require a legislative initiative, Mr. Kest quickly became a leader in the County Treasurers Association of Ohio, for whom he is the legislative chairman.

Within a few years, Mr. Kest and several other large-county treasurers successfully lobbied for programs that allowed them to set up payment plans for delinquent taxpayers and provide funding to pursue those who refused to pay. Later, Mr. Kest helped get legislation passed that provided property-tax relief for seniors on a fixed income, he said.

“Ray has been on top of everything. He has been the leader,” said Tom Steenrod, the association's executive director and former Athens County treasurer. “I'm sure glad he has been at my side in a lot of the battles we have fought.”

Mr. Kest won re-election to another four-year term as county treasurer last year. He is paid $62,500 a year. As mayor, he would make $136,000 a year.

County probate court administrator Charles Shaffer, who worked with Mr. Kest on some of his legislative initiatives during a long stint at the treasurer's office that ended in 1991, said his former boss was a trendsetter in the field.

“Nothing like that ever existed before,” he said, referring to the programs Mr. Kest helped initiate.

Mr. Shaffer, who is supporting Mr. Kest's bid for mayor, said his former boss is a superior treasurer.

“I've seen him [in action]. I know what he's capable of doing,” he said. “If I didn't think the guy was doing the job, I wouldn't waste my time supporting him. He's not my boss.”

Soon after taking office, Mr. Kest pulled his office's account from the former Toledo Trust bank and invested the money himself. At the time, the portfolio was valued at $76 million, he said. Last year, it had an average balance of $240 million and his office earned about $13.6 million in investment revenue, according to Mr. Kest.

“We have aggressive but very safe investments,” he said. “The county has never lost a dime.”

Among his more popular investments, Mr. Kest, unabashedly pro-development, bought $6 million in bonds from the county for the new Mud Hens stadium downtown. He says he will do the same for the Marina District project in East Toledo.

Mr. Kest said the city has a similar-size portfolio but made $1.5 million less in its investments last year.

“I'm doing a better job investing than the city is doing. That's the bottom line.”

Figures provided by city officials tell a different story.

With a portfolio with an average balance of about $227 million last year, the city earned investment revenue of about $14.9 million with a 6.58 percent rate of return, said Scott Searle, administrative services officer in the city's finance department.

Mr. Kest said his office constantly is paying out funds to local schools and social service agencies while the city's cash flow is more stable. As a result, he said, the rate of return is the more important number.

“I maintain I made the higher rate,” Mr. Kest said.

But John Irish, deputy treasurer, said rate of return on investments in his office was 6.08 percent, or 0.42 percent below the city's. Mr. Irish, who said the county also had unrealized gains of $1.4 million, said it's difficult to compare the two.

“The city and county are in different kind of financial reporting systems,” he said.

More certain is the state of the treasurer's books.

“We balance with each other every day, and we make sure their books match our books,” said Mr. Kaczala. “They are balanced to the penny, and we've never lost a cent.”

Mr. Kaczala, a Republican candidate for secretary of state, has been with the auditor's office as long as Mr. Kest has been treasurer.

“Even though he's a Democrat and I'm a Republican, we get along,” he said. “Our offices have to mesh, or it screws up county government. Both my office and his are professionally run, and we're very good at what we do.”

Mr. Kest is a busy man, but not all of his work is related to his treasurer's job, where he says he spends 40-plus hours a week. For 20 years he taught two courses at the University of Toledo. He stopped teaching in 1997. He also owned a mortgage company, Second Chance Mortgage Co. on Secor Road, for a number of years but sold the firm several months ago, he said. In winter, he operates a tax return business, mainly for family and friends, but will cease that activity if he becomes mayor, he said.

Other than politics, golf is Mr. Kest's favorite hobby. He combines the two each summer when he hosts a golf tournament with the proceeds going toward his political campaigns.

Mr. Kest said he travels about twice a month, usually to state and national conferences and meetings of the several work-related associations with which he's involved. He also travels for CPA re-certification classes and continuing education courses related to his work. All this travel is paid for by the county, he said.

With delinquent payments down, Mr. Kest said he has reduced his staff from 40 to 33 in the past year or two.

Many of his key employees - secretary Janet Ferrara, office manager Cathy Tillman, human resources manager Lee Banks, internal auditor Greg Shank, tax collector Dominic Montalto, Mr. Irish, and real estate director Joe Beckler - have been with him for years and are loyal Kest supporters. Mr Montalto, Mr. Beckler, and Mr. Irish are Mr. Kest's key political operatives, but Mr. Kest said no one on his staff does any political work for him on county time.

“When they are working on the campaign they are off on their vacation time,” he said. “We're very, very careful about that.”

Mr. Kest said he is being careful about a number of things these days, particularly after he was sued for sexual harassment by a former employee and a long-time friend, Terry Hartkopf, in 1998. Although the jury in the lawsuit found the charges against Mr. Kest had no merit, his defense cost taxpayers $158,061.

In a deposition from the lawsuit, Mr. Kest said it was not uncommon for his staff to take long lunches on Fridays and staff birthdays, at which drinking was allowed.

Those policies have changed, he said.

“The social stuff is over. It just needed a change, and it did. [The lawsuit] was one of the determining factors. I would say our office was a fun place to work. We still have a nice atmosphere, but it's a much more serious atmosphere.”