AN ACT Relating to the investigation of in-state investment opportunities by the state investment board; and adding new sections to chapter 43.33A RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that the availability of adequate funds to meet the diverse financing needs of the enterprises located in the state is essential for the provision of sufficient quality employment for the citizens of the state. The increased involvement of the state economy in the international economy, the dramatic shifts in financial markets, and the deregulation of the banking system require the state to explore new avenues to assure an adequate supply of capital in the state economy. The financial characteristics of the trusts and capital funds managed by the state investment board with their requirements for long-term investment, low risk, and diverse portfolios may permit the state investment board to encourage additional in-state investment in the pursuit of its legislatively mandated purpose.

The legislature reaffirms that the purpose of the state investment board is to provide professional investment management of trusts, operating funds and capital funds established by law and that the goal of state investment board management is to accomplish the purpose of each trust or fund. The legislature declares that the purpose of the plan and the process set forth under sections 1 through 3 of this act are subordinate to the statutory purposes of the state investment board. Nothing in sections 1 through 3 of this act requires the investment board to implement any part of this plan if, in the judgment of the state investment board, to do so would conflict in any way with the purposes reaffirmed in this section.

NEW SECTION. Sec. 2. The business assistance center established under RCW 43.31.083 shall investigate and plan for profitable in-state investment opportunities. The business assistance center shall develop a plan to increase the amount of profitable in-state investment, consistent with the statutory purpose of each trust or fund managed by the state investment board. The business assistance center shall deliver the plan to the state investment board. The plan shall discuss potential investments to be made during the first to fifth fiscal years following submittal, and shall include:

(1) A report describing the types of investment in businesses in this state which will have the greatest likelihood of enhancing the economic health of the citizens of this state. The report shall discuss the amounts and categories of investments recommended. The report should examine the potential for the board to act as a developmental investor, focusing on the following types of investments:

(a) Those types of investments which are best matched to the financial characteristics of the funds managed by the state investment board. They should include investments which are long term, in which the risk of loss is minimized, and which serve to retain a prudent portfolio diversity.

(b) Those investments which would increase net investment in the state and which would not primarily replace existing investments in the state.

The prudent investment of the funds under the management of the state investment board remains the purpose of the state investment board, and the report should not investigate those types of investments which would promote the economy of the state at the expense of the prudent investment of those funds under the management of the state investment board.

(2) Proposed nonbinding management objectives for each fiscal year stated as a dollar amount or as a percentage of the total amount of all investments made by the investment board, for:

(a) Investments in companies domiciled in this state and for other investments benefiting this state.

(b) Investments, except secondary market stock or bond purchases, in companies to which all of the following apply: (i) The company has more than fifty percent of its employees employed in this state or more than fifty percent of its fixed assets located in this state; (ii) the company meets the size standard for a small business under 13 C.F.R. 121; (iii) the company sells a substantial portion of its goods or services outside of this state; and (iv) the company is reasonably likely to use the funds invested by the investment board to maintain or expand employment in this state.

(3) Recommended actions to help the board meet its management objectives. The actions may include preparing and distributing informational materials, soliciting and reviewing proposals from venture capital investment firms located within or outside this state for investments in businesses in this state and soliciting investment proposals from businesses in this state.

NEW SECTION. Sec. 3. (1) By January 1, 1989, the business assistance center and state investment board shall report the results of the investigation and plan required under section 2 of this act to the governor, the trade and economic development and ways and means committees of the house of representatives and the economic development and labor and ways and means committees of the senate.

(2) The state investment board shall submit a plan for making investments in the state by January 1 of each odd-numbered year, beginning in 1991. The plan shall be developed in conjunction with the business assistance center established under RCW 43.31.083. The plan should focus on developmental investments that would increase net investment in the state without replacing existing in-state investments. The plan shall be submitted to the governor, the trade and economic development and ways and means committees of the house of representatives, and the economic development and labor and ways and means committees of the senate. Nothing in this section requires the investment board to implement any part of this plan if, in the judgment of the state investment board, to do so would conflict in any way with the purposes reaffirmed in section 1 of this act.

NEW SECTION. Sec. 4. Sections 1 through 3 of this act are each added to chapter 43.33A RCW.