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(Parentheses ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

Legislative Finance Committee (LFC)

SUMMARY

Synopsis of HGUAC Amendment

The House Government and Urban Affairs Committee amendment inserts a new section which specifies an enactment date of January 1, 2000.

Synopsis of Bill

This bill amends Section 6-10-10 NMSA 1978. This section of law sets forth the guidelines for county, municipal and state treasurers investment of public money. Of importance is the requirement that the deposits be made with banks, savings and loan associations, and credit unions that are insured by an agency of the United States.

The significant addition to this section sets forth that county and municipal treasurers have the power to invest all sinking funds, all unexpended money from the proceeds of bonds issued, or other negotiable securities of a county, municipality or school district that is not immediately necessary or deposited in a bank, savings and loan association or credit union in:

• •shares of a diversified investment company investing in nationally recognized fixed income securities index and whose total assets are at least one hundred million dollars;



• •individual, common or collective trust funds of banks or trust companies investing in nationally recognized, broad market, fixed income securities market index and whose total assets are at least one hundred million dollars; and
• •shares of pooled investment funds managed by the state investment officer (State Investment Council).

Investments in these instruments by a county or municipality may be made provided that the board of finance of the county or municipality allows payment of reasonable administrative and investment expenses from the income or assets of the investments.

FISCAL IMPLICATIONS

This bill has no fiscal impact on the general fund. However, the addition of these investment instruments to the investment instruments available to counties and municipalities may provide for a higher return on county and municipal investments made.

Provided that the investments are insured as stipulated in this bill, counties and municipalities may be able to achieve higher returns on investments without additional risk.

SIGNIFICANT ISSUES

Care should be exercised to determine that the total amount of deposits are fully insured. For example the Federal Deposit Insurance Corporation (FDIC) insures accounts for up to $100,000. This amount is for all accounts held with an institution. If there are two accounts of $100,000 with an institution, only $100,000, or one-half of total deposits, is recoverable under the FDIC policy.

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