HB 871: Local government; additional authorized investments; provide

Georgia law currently limits how local governments can invest money under their control, allowing options like state and federal government obligations, bankers' acceptances, repurchase agreements, and the local government investment pool. HB871 amends O.C.G.A. § 36-83-4 to add three new categories of allowed investments. Local governments would be able to invest in registered no-load, open-end mutual funds or investment trusts under the federal Investment Company Act of 1940, in commingled stable net asset value investment trusts created through intergovernmental agreements between two or more local governments, and in commercial paper from domestic corporations that carries top-tier credit ratings from Moody's, Standard and Poor's, or Fitch. The bill does not set an effective date beyond the standard process, and it repeals any conflicting laws.

• Adds mutual funds and investment trusts registered under the federal Investment Company Act of 1940 to the list of investments local governments may use.
• Allows local governments to jointly invest through a commingled stable net asset value investment trust created by intergovernmental agreement between two or more units of local government.
• Permits investment in commercial paper from domestic corporations, but only if it carries top ratings (P-1, A-1, or F-1) from major credit rating agencies.
• Keeps all existing authorized investments, such as state and federal obligations, bankers' acceptances, and repurchase agreements, unchanged.

City and county governments and other local government entities in Georgia that manage public funds, along with the financial officers who make investment decisions on their behalf, and by extension the taxpayers whose money is being invested.

By expanding the menu of allowed investments, local governments could potentially earn different or higher returns on public money, but they would also take on new types of financial products, including corporate commercial paper, that carry different risk profiles than the government-backed options previously allowed.

• Section 1 revises paragraph (1) of subsection (a) of O.C.G.A. § 36-83-4, which lists the authorized investments for local government funds.
• Adds a new category allowing investment in no-load, open-end mutual funds or investment trusts registered under the federal Investment Company Act of 1940, referencing O.C.G.A. § 36-82-7.
• Adds a new category for commingled stable net asset value investment trusts formed through intergovernmental agreements under Article IX, Section III, Paragraph I(a) of the Georgia Constitution.
• Adds a new category for commercial paper from domestic corporations, restricted to top short-term credit ratings from Moody's, Standard and Poor's, or Fitch.
• Section 2 repeals any existing laws that conflict with these changes.

1. 2025-03-31House Second Readers (House)
2. 2025-03-28House First Readers (House)
3. 2025-03-27House Hopper (House)

• Victor Anderson (R, HD-10)Primary sponsor
• Bruce Williamson (R, HD-112)
• Kimberly New (R, HD-40)
• David Clark (R, HD-100)
• Ron Stephens (R, HD-164)
• Billy Mitchell (D, HD-88)

• local government finance
• public fund investments
• municipal law
• commercial paper investing