Bill description: HB 460 would allow the state Endowment Fund Investment Board to manage investments for any government entity in Idaho.
Does it transfer a function of the private sector to the government? Conversely, does it eliminate a function of government or return a function of government to the private sector?
The state Endowment Fund Investment Board was established to manage the income from the sale or use of state public lands. This revenue comes from varied sources, such as timber-harvest payments, mineral extraction rights, the sale of property, or the lease of property. Endowment-generated funds are distributed to varied beneficiaries, primarily public K-12 schools, as well as public colleges and universities, state hospitals, penitentiaries, and the state Capitol Permanent Fund.
HB 460 would expand the role of the investment board by allowing any public entity, within the state of Idaho, including local municipalities, public corporations, and other units of government, to provide funds for the board to manage. The investment board would be allowed to charge management fees.
To expand the state investment board’s potential client base will turn the state into a competitor with private investment managers. When the state competes with private entities in the marketplace it puts these businesses at an unfair advantage. For example, private businesses are taxed, and their tax money is used to fund their competitor, in this case, the government. Expanding the role of the state government in this business could have the effect of crowding out private organizations. While the board does use private investors for its operations, it does still provide management and oversight that other private entities could offer.
Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?
By allowing local governments to put money in with the state Endowment Fund Investment Board, HB 460 would allow local government to make a more efficient use of their resources. With their own money, local governments are limited to very conservative investments, while the Endowment Fund Investment Board can make more aggressive investments. By allowing local governments to earn a higher return on their investments by utilizing the services of the Endowment Fund Investment Board, this could save local governments from increasing taxes and fees in other areas to supplement their budget.
THis analysis was updated 2/21/18 to more accurately reflect the impact of this legislation.
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