Nevada’s investments ahead of projections
Nevada’s interest income is $5 million ahead of what was projected by the economic forum. Treasurer Brian Krolicki said a combination of rising interest rates and more money to invest has led to the increase.
And that’s just for the first two quarters of fiscal year 2006.
The interest income is made on investments made between the time state revenues flow into the treasury and when bills are paid from that pot of money.
“Interest rates continue to rise more swiftly than estimated,” Krolicki told the state Board of Finance on Thursday.
The average interest the state was getting on its portfolio last year was 1.93 percent. Today, he said, it’s slightly more than 4 percent.
The other factor is the amount of money in that investment pool. He said that even after the $300 million rebate to Nevadans, the investment pool has grown from an average of $1.4 billion to almost $1.7 billion – a difference of $280 million. As a result, interest earnings for the state’s general fund pool reached $14.7 million for the first two quarters of the year, easily surpassing the economic forum projection of $9.7 million.
Krolicki said that leaves the state enough of a pad that he expects to move upwards of $100 million in state funds into longer-term investments which will earn the state even more interest. With interest rates at their lowest in decades, he said, the treasurer’s office has been using short-term investments so that, as rates rose, they weren’t locked in to artificially low earnings. The average investment has been just 126 days.
Now, he said, “we’ve got enough money that I can move to longer-term investments – to July 2007.”
He said that will earn the state a higher rate of return than short-term instruments.
Interest income isn’t the only place revenues are exceeding projections. Gaming tax collections were nearly $22.6 million more than forecast for the first seven months of the fiscal year and sales tax collections some $26.7 million more than forecast for the first half of the fiscal year.
Gov. Kenny Guinn credited the strength of Nevada’s economy for the continued economic growth which produces those tax revenues.
• Contact reporter Geoff Dornan at email@example.com or 687-8750.