NOTE: As provided in LFC policy, this report is
intended only for use by the standing finance committees of the
legislature. The Legislative Finance Committee does not assume
responsibility for the accuracy of the information in this report when used for
other purposes.
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SPONSOR: |
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DATE TYPED: |
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HB |
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SHORT TITLE: |
Local Government Investments |
SB |
41/aSFC |
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ANALYST: |
Gilbert |
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APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
FY03 |
FY04 |
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NFI |
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(Parenthesis
( ) Indicate Expenditure Decreases)
LFC Files
SUMMARY
Synopsis
of SFC Amendment
The Senate Finance Committee amendment to Senate
Bill 41 strikes general language allowing county or municipal treasurers to invest
in agencies sponsored by the
The Federal Home Loan Mortgage Association
The Federal National Mortgage Association
The Federal Farm Credit Bank
The Student Loan Marketing Association
Synopsis
of Original Bill
Senate Bill 41 amends NMSA 1978, § 6-10-10, Section
1(F)(2) to clarify that county or municipal treasurers may invest in securities
issued by the United States government or by its agencies or instrumentalities
and that are either direct obligations of the United States or are backed by
the full faith and credit of the United States government or agencies guaranteed
sponsored by the United States government.
Significant
Issues
Allowing counties and municipalities to
investment in securities of agencies sponsored by the United States
Government versus guaranteed by the United States Government will significantly
increase their investment options. For
example, this bill would allow the purchase of Federal Home Loan Bank bonds.
OTHER SUBSTANTIVE ISSUES
Although the United
States Government does not guarantee the new investment options allowed by this
bill, they are all AA or AAA rated securities. Although these securities are
quite sound, counties and municipalities will be accepting slightly more credit
risk. However, they will also be gaining the flexibility to obtain higher investment
yields.
RLG/nw