A bill has reached Gov. Tom Wolf’s desk that, if signed, will help municipalities and school districts earn more money without raising taxes.
House Bill 1296 calls for an expansion of investment opportunities for public funds to include instruments like repurchase agreements, commercial paper and negotiable CDs.
Rep. Kate Harper, the bill’s sponsor, said the change is necessary because municipalities and school districts are making almost no return on the interest. That’s a marked change from 20 years ago, when those returns were significantly more profitable.
“Right now, people who hold public money are severely constrained as to where they can put it to make sure it’s safe. We’re just expanding some of those options,” said Harper.
She stressed that these instruments do not increase the risks of investments, and that new reporting requirements will be implemented to track investments. Due to the varied nature of the instruments, it is difficult to predict how soon or how much of an increase organizations will see.
The bill, said Harper, is also a boon to taxpayers: “If they can make money on the money, then that’s money they don’t have to raise taxes or borrow to get.”
House Bill 1296 is supported by the Pennsylvania State Association of Boroughs, Pennsylvania State Association of Township Supervisors, the Pennsylvania Association of School Administrators and similar organizations.
It passed the House of Representatives 187-3, and 47-0 in the Senate. No Bucks County representatives voted against the bill. Locally, Rep. Gene DiGirolamo and Sen. Chuck McIlhinney did not vote. McIlhinney’s representatives noted that he was on personal leave that day.
“This is the kind of work we do every day up here,” said Harper. ”[The bill] went through without any partisan rancor, and I hope the governor will sign it.”
According to the governor’s office, House Bill 1296 is going through the normal process, and there is no indication whetherhe will sign it.
Locally, Brian Hessenthaler, Chief Operating Officer for Bucks County, expressed eagerness for the bill to pass.
“Our budget over the last five, six years has taken a hit in interest earning. We’ve been able to weather it but this will help things out a bit,” he said at the Bucks County Commissioners’ meeting on March 16. “There are over 5,000 municipalities and school districts … that will benefit from this.”
In a follow-up interview, Hessenthaler, whose background is in finance, reiterated that the bill does not increase the risk of investments.
“We’re not talking about stock markets or anything like that,” he said.
Hessenthaler hasn’t spoken with any municipalities or school districts yet, as the bill has not yet been signed. But, he said, firms like the Pennsylvania School District Liquid Asset Fund and Pennsylvania Local Government Investment Trust, where he is a board member, will use “marketing blitzes” to inform clients of new opportunities once they’re available.
“The most difficult part will be making some people comfortable with the level of security,” Hessenthaler predicted. “Depending upon the investment experience of the person making the calls, there may be some skepticism.
But, he added, “Nothing’s ever guaranteed, but these are about as secure as the ones they’re investing in now.”