| TO: | Honorable Burt R. Solomons, Chair, House Committee on Financial Institutions |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB3004 by Christian (Relating to the investment of public funds, including making investments in ways that benefit the state and local economies, and to the selection of local financial institutions for the deposit of public funds.), As Introduced |
Because the difference in returns for investments, those that would be affected by this bill and those that would replace them, the fiscal impact of the bill cannot be estimated at this time.
The bill would add sections to the Government Code and the Local Government Code relating to the investment of public funds to benefit Texas.
Under the bill, the Comptroller's state treasury operations, local governments, state agencies, nonprofit corporations acting on behalf of a local government or a state agency, and investment pools acting on behalf of two or more local governments would have to compare potential investments to determine which investments would probably provide more of a benefit to the Texas economy.
If it were determined that it was reasonably possible to make the equally prudent investment that would probably provide a benefit to the Texas economy, the bill would require that the investment be made in that manner.
The bill would require the Comptroller to, by rule, establish liquidity requirements that would apply to funds held by state and local governmental entities. To the extent that a state or local governmental entity held funds that exceeded the liquidity requirements, the entity would have to invest the excess funds in a manner designed to achieve a higher yield than depository interest. The bill would require state and local governmental entities to invest certain funds under new investment authority that the bill would provide.
This bill would take effect September 1, 2007.
| Source Agencies: | 304 Comptroller of Public Accounts
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| LBB Staff: | JOB, KJG, JRO, JM
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