Texas House Bill HB3361

Texas 2009 - 81st Regular

Caption

Relating to a study by the comptroller on the use of call options by state government as a hedge against inflation in the cost of commodities purchased by state government.

Impact

This study is significant as it seeks to explore alternative financial instruments that state government can utilize to manage budgetary pressures caused by inflation. By investigating the costs, potential savings, and associated risks of call options, the bill aims to inform policymakers on whether this approach could effectively stabilize state expenditures on commodities, ultimately impacting how the state manages its financial resources under inflationary conditions.

Summary

House Bill 3361 mandates a study to be conducted by the Texas Comptroller concerning the use of call options as a potential financial strategy to hedge against inflation affecting the cost of commodities purchased by the state government. The bill directs the Comptroller to evaluate the feasibility and advisability of implementing such a financial tool, which could help mitigate risks associated with rising prices for essential goods and services acquired by the state.

Contention

Notably, there may be varying opinions regarding the appropriateness of using call options within state government financial strategies. While proponents may see it as a proactive measure against inflation, there could be skepticism about the complexities and risks inherent in derivatives trading, particularly within a government context. Critics may argue that such financial tools could expose the state to unpredictable financial losses, complicating budget forecasts and fiscal responsibility.