HCS HB 883 -- INVESTMENTS BY THE STATE TREASURER

SPONSOR:  Cunningham (Flook)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Financial
Institutions by a vote of 10 to 0.

This substitute changes the laws regarding the State Treasurer's
asset allocation plan which limits the total amount of state
moneys that may be invested in any particular investment
authorized by Section 15, Article IV of the Missouri
Constitution.  In its main provisions, the substitute:

(1)  Requires the plan to establish diversification limits
including a restriction limiting the total amount of time
deposits of state moneys, not including linked deposits, placed
with any one single banking institution to be no greater than 10%
of all time deposits of state moneys;

(2)  Requires, beginning January 1, 2010, the rate of interest
payable by all banking institutions on time deposits, other than
linked deposits, to be at least the average rate paid during the
week next preceding the week in which the deposit was made for
United States Treasury securities maturing and becoming payable
closest to the time of termination of the deposit on the first $7
million deposited.  The rate of interest on any deposits in
excess of the $7 million will be set at the market rate as
specified in Section 30.260.6, RSMo.  The $7 million amount will
decrease by $2 million annually until January 1, 2014, when it
reaches zero and the rate of interest on all deposits will be the
market rate.  Currently, the rate of interest must be the same as
the average rate;

(3)  Allows bonds or other obligations of certain political
subdivisions to be acceptable securities for moneys deposited by
the State Treasurer in approved banks or financial institutions.
Currently, certain political subdivisions can only use bonds;

(4)  Prohibits United States Treasury securities and United
States Federal Agency debentures issued by Fannie Mae, Freddie
Mac, Federal Home Loan Bank, or Federal Farm Credit Bank valued
at market and deposited as collateral from exceeding 105% of the
aggregate amount of time deposits and demand deposits.  All other
securities, except as noted elsewhere, cannot exceed 115% of the
aggregated amount of the time deposits and demand deposits;

(5)  Allows eligible multitenant development enterprises,
alternative energy consumers, and governmental entities as
specified in Section 30.750 to acquire a loan through the Linked
Deposit Program;

(6)  Expands the definition of "eligible job enhancement
business" to include when the applicant can demonstrate
significant costs for equipment, capital outlay, or capital
improvements associated with the physical expansion, renovation,
or modernization of a facility or equipment.  The maximum amount
of the linked deposit cannot exceed $50,000 per job created or
retained plus the initial cost of the physical expansion,
renovation, or capital outlay; and

(7)  Increases the number of employees in the definition of
"eligible small business" from less than 25 to less than 100.

FISCAL NOTE:  No impact on state funds in FY 2010, FY 2011, and
FY 2012.

PROPONENTS:  Supporters say that the bill will allow banks to be
more competitive, allow businesses to expand because of being
able to get low interest loans, and help small communities in
Missouri by allowing moneys to be deposited into small community
banks.

Testifying for the bill were Representative Flook; Office of the
State Treasurer; Missouri Bankers Association; Missouri Municipal
League; Missouri Farm Bureau; and Missouri Chamber of Commerce
and Industry.

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
95th General Assembly, 1st Regular Session
Last Updated November 17, 2009 at 9:25 am