SQ#800-Oil and Gas Development Tax Revenue Investment Fund
- Thread starter Bitter Creek
- Start date
This one is easy and should have happened a long time ago at least in the gernalities of the law. Basically a way to store away a portion of oil and gas taxes for use at a later day.
I would be okay if there was a way to bypass funding the investment fund for a particular fiscal year if the current year’s tax haul was significantly less than the previous year and thus the state is in a budget short fall. And perhaps a mechanism to make up for the funding shortfall year once tax receipts are back to the previous normal.
I would be okay if there was a way to bypass funding the investment fund for a particular fiscal year if the current year’s tax haul was significantly less than the previous year and thus the state is in a budget short fall. And perhaps a mechanism to make up for the funding shortfall year once tax receipts are back to the previous normal.
I hate it when we choose to not do the right thing because we don't trust that those in charge will actually do the right thing.
I wish I knew more about it, i voted no.
So are there any restrictions on how they spend the $ in this new fund? My concern was they're just taking $ away from education now to spend it on something unknown in the future.
So are there any restrictions on how they spend the $ in this new fund? My concern was they're just taking $ away from education now to spend it on something unknown in the future.
I didn't think about it from that aspect. I thought that this oil/gas money was part of the general fund.
From what I read it creates a state treasurer managed "IRA" fund that would contribute 4% back to the general fund annually.
My question is what happens in those years that the market tanks followed by a recession.
My question is what happens in those years that the market tanks followed by a recession.
Generally these type of funds are prohibited from owning stocks directly (or at least more than a small percentage) and that the vast majority must be in other securities that achieve very specific Credit risk ratings (bonds - gov and corp, and derivatives). It doesn't mean the fund can't lose money. But it reduces its overall exposure to the swings. With today's interest rates, 4% is a pretty easy and low-risk rate-of-return. Heck, a government 10 year is at 3.3%. State bonds would pay 4%+. It could end up working a little like the Fed in that this fund would buy State bonds that pay 4%+ and then pay its earnings back to the state. Sort of a loophole, but assuming the fund is large enough, it could actually benefit the state as it becomes a buyer of the bond and helps keep the final interest tally lower. Much like the Fed had done under Obama in being the biggest buyer of US Bonds.
