By John Sharp
Constitutional Amendment 1 approved by the General Assembly in 2021 would allow the legislature to broaden the investment options for state funds available for the state treasurer to utilize to increase the state’s interest income.
Current constitutional provisions strictly limit what types of securities the treasurer can invest in, and while safe, these categories of investment often do not pay competitive interest rates compared to other prudent investments.
Critics contend this change could allow the legislature to approve investment categories that aren’t safe enough or those being pushed by influential political contributors.
Proponents point out that legislation approving new investment categories would have to be approved by majorities of the entire membership of the House and Senate and signed into law by the governor and that it would be the treasurer’s decision whether to utilize any new options after determining they are both reasonable and prudent.
Besides any new investment options the legislature would grant the treasurer, Amendment 1 specifically allows investments in U.S. government obligations that mature no more than seven years from the date of purchase, up from the current five year cap, and investments in top-rated municipal securities.
The ballot language for Amendment 1 notes it is estimated to increase state interest income by $2 million a year.