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Montana Public Funds Investment, C-44 (2008)

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The Montana Public Funds Investment Amendment, also known as C-44, was on the November 4, 2008 ballot in Montana as a legislatively-referred constitutional amendment, where it was defeated. The measure would have allowed up to 25 percent of certain public funds to be invested in private corporate capital stock. At the time, the Montana Constitution only allowed Retirement Funds and Worker's Compensations Insurance Funds to be invested in private corporate capital stock.[1][2]

Election results

Montana C-44 (2008)
ResultVotesPercentage
Defeatedd No337,65674.07%
Yes 118,178 25.93%

Election results via: Montana Secretary of State

Text of measure

The language appeared on the ballot as:[3]

CONSTITUTIONAL AMENDMENT NO. 44 AN AMENDMENT TO THE CONSTITUTION PROPOSED BY THE LEGISLATURE

AN ACT SUBMITTING TO THE QUALIFIED ELECTORS OF MONTANA AN AMENDMENT TO ARTICLE VIII, SECTION 13, OF THE MONTANA CONSTITUTION TO ALLOW UP TO 25 PERCENT OF CERTAIN PUBLIC FUNDS TO BE INVESTED IN PRIVATE CORPORATE CAPITAL STOCK; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE.

The 2007 Legislature submitted this proposal for a vote. This measure would amend the Montana Constitution to allow up to 25 percent of all state trust fund assets to be invested in private corporate capital stock. Currently, the Constitution allows only Retirement Funds and Workers’ Compensation Insurance Funds to be invested in private corporate capital stock.

In the short term, it is expected that income will be reduced while trust monies are transferred from bonds to stocks. In the long term, if historical investment performance continues, trust fund income may increase because aggregate stock values are expected to appreciate, while bond values do not.

[ ] FOR allowing up to 25% of all public funds presently restricted to fixed income investments to be invested in private corporate capital stock.

[ ] AGAINST allowing up to 25% of all public funds presently restricted to fixed income investments to be invested in private corporate capital stock.[4]

Support

Supporters

Arguments

Notable arguments made in support of the measure included:[3]

  • If the measure passed, it would allow more investment diversity for the state, which would improve returns.
  • Montana is one of the few states that does not allow equity investments to be used to add to trusts.
  • Under the current Constitution, state investment managers can only invest in bonds. When bonds' interest goes down, managers are unable to take advantage of more lucrative opportunities.
  • A variety of investments will reduce the risks that exist when only one type of investment is utilized.
  • State legislators voting to put C-44 on the ballot totaled 125 out of the 150 member body.
  • The measure doesn't mandate a percentage of investment, it only allows for more, so in times of economic hardship the percentage can be 0%

Opposition

Opponents

Arguments

Notable arguments made in opposition to the measure included:[3]

  • The inherent risks involved in stock investments would put state funds in jeopardy. This risk is amplified by the current economic situation in the United States.
  • If passed, the initiative could lead to corporations and lending companies lobbying state officials in order to sell their stock to the Montana public fund.
  • The government would be under pressure to give special protection to the companies in which it had invested to protect those investments, which would hinder the competitive ability of smaller businesses.
  • According to Article X, Section 3 of the Montana Constitution, any loss to the Montana public fund must be reimbursed through higher taxes, meaning bad investments could lead to raised taxes.

See also

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