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F I S C A L I M P A C T R E P O R T

SPONSOR:	Knauer		DATE TYPED:	2/06/02		HB	402
SHORT TITLE:		Short-Term Investment Fund				SB
					ANALYST:		Smith

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY02

FY03

NFI

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC

No Response

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

House Bill 402 removes the requirement that financial institutions within the boundary of the local government have the “right of first refusal” on that local governments’ public funds. These local banks would have to compete with the state treasurer’s short-term investment fund.

FISCAL IMPLICATIONS

The right of first refusal amounts to an implicit subsidy to local financial institutions. Local governments would presumably earn a higher risk adjusted rate of return under this proposal.

SS/ar