LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                           May 15, 1995



 TO:     Honorable Kenny Marchant, Chair        IN RE: Committee Substitute
         Committee on Financial Institutions    for
         House of Representatives                              Senate Bill
         Austin, Texas                          No. 1128
                                                        By: Ellis









FROM: John Keel, Director

In response to your request for a Fiscal Note on Senate Bill No.
1128 (relating to the deposit, investment, safekeeping, and
records and reports of, and collateral requirements for the
deposit of, funds held by the state treasurer) this office has
determined the following:

The bill would prohibit the investment in certain derivatives and
would limit the amount of state funds which the treasurer may
invest in certain derivatives. 

The bill would allow certain state agencies to impose penalties
if eligible payments are not remitted by electronic funds
transfer.

The bill would allow the state treasurer to give contingent
approval to an eligible financial institution desiring to hold
$98,000 or less in state deposits pending final approval by the
state depository board.

The bill would allow the treasurer to invest any state funds, not
just bond proceeds, in state and local obligations and mutual
funds which have the same investment authority as the state
treasury.

The bill would amend the statute to eliminate the current
requirement that the interest rate on tax and revenue    




anticipation notes be one percent less than the interest rate
earned by the treasury.

 The bill would authorize state and federal credit unions as
state depositories.

The probable fiscal implication of implementing the provisions of
the bill during each of the first  five years following passage
is estimated as follows:



            Fiscal  Probable Revenue 
             Year   Gain to General  
                    Revenue Fund 001 
                                     
          1996             $2,500,000
          1997              2,500,000
                                     
          1998              2,500,000
                                     
          1999              2,500,000
          2000              2,500,000
                                     
                                     
                                     
       No fiscal implication to units of local government is
anticipated.


Source:   Treasury Department
          LBB Staff: JK, MS, RR