CHEYENNE, Wyo. (AP) - An investment consultant says a percentage of investment income from the state of Wyoming's permanent funds should be returned to the accounts to protect the state from inflation.
Wyoming needs a spending policy to help it decide how best to invest its permanent funds, said Nicole Faucher, president of R.V. Kuhns, a Portland, Ore.-based consulting firm hired last year as the state's investment consultant.
Ms. Faucher questioned the state's policy of spending all of its investment income from the $925 million Common School Permanent Land Fund.
"The corpus of the fund isn't growing, and that is going to cause some real problems down the road," she told legislators during the initial meeting of the Select Committee on Capital Financing and Investments.
The panel was appointed to review the state's investment policies and make recommendations for any necessary changes.
Without a spending policy, lawmakers are subject to the lobbying powers of supporters of various projects, according to Rick Miller, director of the Legislative Service Office.
State Treasurer Stan Smith suggested a good first step would be a cap on the amount of legislative-directed investments. He noted a total of $860 million has been authorized for 26 projects, but only about 40% actually has been allocated.
One of the tasks assigned to the panel is to determine which projects might be considered obsolete, freeing up the allocated funds for other investments.
Ms. Faucher advised lawmakers and the State Loan and Investment Board to take a long-term view of investments.
Wyoming voters authorized the investment of up to 25% of its permanent funds in domestic stocks in November 1996. But the state's policy of only allowing $10 million a month to be added to its domestic stock investments has been too cautious, she said: "In the equity market, you have to walk before you can run, but right now you're crawling.