New law to boost counties’ income
A law that prevented the state’s county treasurers from investing in securities with credit ratings less than AAA is no more.
Lt. Gov. Joe Garcia signed the measure Wednesday. Gov. John Hickenlooper was in Houston.
The Legislature gave its final approval Wednesday to a bill that Democrats had fast-tracked through the Colorado Senate this week to allow county treasuries to earn more interest on investments in U.S. securities.
The measure, HB1005, languished in the House for about a month, prompting treasurers from around the state to pressure lawmakers to pass it.
They did so Monday on a 65–0 vote. The Senate unanimously approved it on Wednesday and sent it to the governor’s office.
At issue is a state law that allows treasurers to invest only in securities that have a AAA rating from at least two credit rating services, such as Moody’s or Fitch.
But when Standard & Poor’s last summer downgraded U.S. securities from AAA to AA+, county treasurers were barred from investing in them.
Under HB1005, introduced by Rep. Dan Pabon, D-Denver, and Sen. Ted Harvey, R-Highlands Ranch, county treasurers would be able to invest in government bonds with ratings as low as AA-, which is still considered a high grade.
County treasurers estimated that for each day the bill is not passed, they are losing about $165,000 in interest.
Mesa County Treasurer Janice Rich said she’s calculated that the county lost more than $256,000 last year in interest income because she was not allowed to invest in government securities.
Rich said despite the downgrade, U.S. Treasury Bonds still are attractive investments because they are among the safest.
“It’s a very low interest, but it’s very secure,” Rich said. “When we’re dealing with public monies, I’m not going to risk the taxpayers’ money.”
Rich, who’s on the legislative committee for the Colorado Treasurers Association, said the group doesn’t know why the GOP-controlled House sat on the bill for so long.
While the measure had wide support in the Senate, some legislators questioned if the bill was the best way to fix the problem.
“It’s a sad and sobering thing that the state has to lower its investment standards to simply deal with buying U.S. bonds,” said. Sen. Shawn Mitchell, R-Broomfield. “Would it make more sense to keep the standard to AAA, but to also authorize the purchase of U.S. bonds?”
Harvey said it isn’t just U.S. bonds that are at issue, but all U.S. investments.