WASHINGTON – Kent Hiteshew, director of the Treasury Department’s Office of State and Local Finance, plans to leave the department at the end of the week.
A Treasury spokesperson said the office will “continue its mission with the support of [its] dedicated staff as [Treasury searches] for a new director.”
Hiteshew, who started up the office at Treasury in May 2014, played a key role on several state and local issues, including working with members of Congress and others to address Puerto Rico's deteriorating financial situation. He said he had planned to leave the department at the end of last year but stayed on after the outgoing and incoming administrations asked him to help during a transition period.
He never relocated to Washington during his time at Treasury and instead commuted from New York City. He said he does not have any specific plans for the future at this point other than to take a summer break.
The Office of State and Local Finance provides Treasury’s leaders with monitoring, analysis, and input on the municipal bond market, state and local infrastructure finance, public pensions, distressed entities, and long-term state and local fiscal management issues. The idea for the office originated, in part, after the White House kept getting requests for assistance from troubled governments and had no centralized group capable of coordinating a response, Treasury officials said in 2014.
During the past three years, the office has devoted most of its time to the deteriorating financial situation in Puerto Rico.
Hiteshew last year described the office’s role on Puerto Rico as being a nonpartisan source of information for members of Congress and a provider of technical assistance. He and other individuals in the office worked extensively on PROMESA, the law that Congress passed to help address Puerto Rico’s fiscal turmoil and massive debt load. The law provides fiscal oversight through a seven-member oversight board and gives the commonwealth debt restructuring tools, including a Chapter 9 bankruptcy-like process that it can enter into if it is not able to renegotiate the repayment of its debt.
The commonwealth, which is saddled with roughly $70 billion of debt and $46 billion of unfunded pension liabilities, is currently pursuing that bankruptcy-like option before a U.S. court judge.
The office also has focused on infrastructure matters. About two months after he started the office, Hiteshew was one of the key people who staffed President Obama’s Build America initiative and was an architect of the idea for qualified public infrastructure bonds (QPIBs). QPIBs would have given equal access to tax-exempt financing for both public-private partnerships and basic public offerings.
Hiteshew and his team released a Build America report in January 2015, but QPIBs and other infrastructure suggestions in the report did not move forward during the Obama administration.
Pension plans have also been a key focus for the office. While the federal government does not have a designated role in state and local pension plans, the Office of State and Local Finance can develop pension ideas, obtain data and improve transparency for the thousands of existing state and local pension plans.
Hiteshew joined Treasury after a 30-year career in public finance on Wall Street. He worked with JPMorgan overseeing public finance for the Northeast region and the firm’s housing finance group. He also worked at the now-defunct Bear, Stearns & Co. for 18 years as well as earlier at Morgan Stanley Inc. and the former Drexel Burnham Lambert. He held various positions in New York City at a time when the city was just coming out of its control board era. Hiteshew additionally has worked with the U.S. Department of Housing and Urban Development.
Earlier this year, the Office of State and Local Government received some criticism from Sen. Orrin Hatch, R-Utah. In a series of written questions to Steven Mnuchin, who was then President Trump's nominee for Treasury Secretary, Hatch complained the office was established “without notification or discussion” with him when he was ranking minority member of the Senate Finance Committee. The senator added that he was concerned the office was going beyond its authorized capabilities to provide only technical assistance to Puerto Rico. Mnuchin responded to Hatch saying he would review the office’s operations.
