Banking Commerce and Insurance

Bill targets political use of state funds

The Banking, Commerce and Insurance Committee heard testimony Jan. 30 on a bill intended to ensure that state funds not be used for political purposes.

Sen. Julie Slama
Sen. Julie Slama

LB67, sponsored by Dunbar Sen. Julie Slama, would require the state treasurer to ensure that money deposited by the office not be used by financial institutions for “social or political causes or objectives.”

Slama said she brought the bill to help ensure that anyone holding the office of state treasurer maintain neutrality when handling public funds.

“Nebraska taxpayers’ dollars should not be used to further political or social agendas,” Slama said. “Those dollars must only be used for the limited and specific purposes for which they are collected.”

State Treasurer John Murante testified in favor of the bill, saying there has been a “growing trend” nationally of attempts to use state funds for political purposes. In some states, he said, state treasurers have indicated that they will bank only with institutions that are committed to certain political objectives.

Murante said he has no concerns about the financial institutions that his office currently has relationships with, but that the bill is meant to head off problems in the future.

“There are now even candidates who are openly running for state treasurer across the country who are saying that is why they are running — to use the power and influence of the capital they have under management for political causes,” Murante said.

Robert Hallstrom, representing the Nebraska Bankers Association, testified in opposition to the bill. The stated purpose of LB67 is to ensure that the state treasurer not use their office as a “bully pulpit” to further a political agenda, he said, but the bill as written instead would restrict the ability of the state’s banks to do business.

Financial institutions need to be able to make decisions based on return on investment, not political considerations, he said, and the bill would give state regulators the power to impose their political will on banks based on their authority to deposit or withhold state funds.

“The fundamental principles that have existed as long as I have been involved with the banking industry are that financial institutions should be free to lend to, invest in and generally do business with any entity or activity that is legal,” Hallstrom said.

In her closing statement to the committee, Slama indicated that negotiations on the bill with stakeholders are ongoing. The committee took no immediate action on LB67.

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