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