Orange County investments yield nearly $50M
Orange County investments yielded a haul of nearly $50 million in fiscal year 2018-19, but a repeat performance is not likely this year, Comptroller Phil Diamond said.
In a presentation Tuesday to Orange County commissioners, Diamond said the county’s interest earnings have grown over four years from $10 million to $49.6 million.
“I do want to caution you, like they say, past performance is no guarantee of future results,” he said, quoting a disclaimer often cited in TV investment pitches.
Diamond said the county’s “safe” portfolio benefited in FY 2018-19 from relatively high interest rates, all of which have been lower so far this fiscal year.
The current 2019-20 fiscal year started Oct. 1.
Diamond said investment earnings can be transferred to a reserve fund or the county general fund, the primary account for paying Orange County government’s bills.
“It’s additional money we’re bringing into the county to use on key investments or to keep the cost of government low,” Diamond said. “It’s good news.”
The Comptroller, elected by county voters, acts as an independent watchdog for residents monitoring county spending and investments.
Though last year’s return was impressive, Diamond said the county’s strategy is to put its money in safe investments that can be accessed quickly if needed.
Diamond said the county’s investment pool does not have any stock investments because those options are more volatile and subject to price fluctuations.
He punctuated his presentation with a famous quip from humorist
Will Rogers: “I am more concerned with the return of my money than the return on my money.”
County investment earnings jumped from $17.7 million in fiscal year 2016-17 to $31.1 million in FY 2017-18 to $49.6 million in FY 2018-19.
The county is required to invest according to restrictions and guidelines outlined in state statute, county ordinances and commission-approved policy.
Diamond said the county invests in financial instruments allowing quick access for the county to pay its obligations — whether its payroll or buying a new fire truck.
Among concerns for FY 2019-20 are falling interest rates.
“Interest rates have been significantly lower this year,” Diamond said. “When rates are lower, the investments will earn less interest.”
Unless interest rates rise significantly, the county’s investments will earn much less money this year than last.
Investments are sometimes affected by market-shaking events like the current uncertainty over the coronavirus, a viral infection linked to respiratory disease.
Worried investors dumped stocks this week amid fears of the virus, which was first detected in China but has since spread globally, including to the United States.
But the county is invested in more conservative assets and Diamond said the coronavirus is not viewed at this time as a risk to the investment portfolio.
“Thankfully, there have not been any reported cases of coronavirus in our area,” Diamond said. “So, we haven’t seen any impact on tourist development tax collections.”