HB 2770

83(R) - 2013

Vote Recommendation

  • Neutral
  • Neutral
  • Neutral
  • Negative
  • Neutral


Dan Branch

Bill Caption

Relating to the investment of certain money in the economic stabilization fund.

Fiscal Notes

Depending on the amounts and types of investments made by the Comptroller under provisions of the bill, as well as future financial market conditions, there could be an indeterminate revenue gain or loss to the Economic Stabilization Fund.

Bill Analysis

Summary: The Texas Constitution states in Article III, Section 49-g (g), that the amount of money in the Economic Stabilization Fund (ESF) may not exceed 10% of the total amount deposited into General Revenue from the preceding biennium. HB 2770 requires the comptroller to invest more than 20% of the ESF’s maximum authorized balance according to the investment standard stipulated by Section 404.024 (j), which states “The comptroller shall invest those funds under the restrictions and procedures for making the investments that persons of ordinary prudence, discretion, and intelligence, exercising the judgment and care under the prevailing circumstances, would follow in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital.”

HB 2770 essentially frees the comptroller to invest between 0 and 80% of the funds in the ESF as a prudent investor, defined above. The other 20% would be managed as it currently is managed. The goal is to grow the ESF by allowing the comptroller to pursue a moderately more aggressive investment plan.

Analysis: Growing the amount of money in the ESF is an attractive idea. It would expand the amount of money available to deal with disaster. Still, growing this money would require the comptroller to put this fund at risk, even if it is only the risk a prudent investor would take in managing their own finances. Management of the ESF should remain as safe as possible, even if that means the fund does not grow as fast as it could. Putting the comptroller in charge of investing Texas’ ESF puts these funds at risk. Vote “no,” on HB 2770.