The treasurer of Kansas proposed legislation Wednesday to legalize diversion of about $75 million from a state reserve account to purchase Israeli government bonds.
Treasurer Jake LaTurner, who is exploring a campaign for U.S. Senate, said the bill would enable the Pooled Money Investment Board to invest up to 2 percent of a $3.8 billion fund in bonds issued by Israel. The Kansas PMIB has no legal authority, under existing Kansas law, to make investments in sovereign debt of a country other than the United States.
"We're talking about a lot of money, of course, but only 2 percent of the whole portfolio," LaTurner said. "It's a great rate of return. Good, safe investment."
The Senate Federal and State Affairs Committee accepted introduction of LaTurner's bill without debate. LaTurner is a former Republican senator from southwest Kansas and served on the committee before appointment as state treasurer in 2017 by Gov. Sam Brownback.
In an interview, LaTurner said Israel was among Kansas' top 20 trading partners and an important ally of the U.S. as the only democracy in the Middle East. He said about 20 states have comparable investment laws tied to Israel.
The treasurer's proposal would exclusively address investments beneficial to Israel rather than open up the PMIB to investment in government bonds from other U.S. allies.
"We think it's a great next step for Kansas to diversify its portfolio," LaTurner said. "I'm certainly open to having the discussion about other nations' sovereign debt."
LaTurner said Israel Bonds, an Israeli development corporation, approached the state treasurer's office about reforming Kansas investment law. Israel Bonds reported 2018 annual sales in the U.S. of more than $1 billion.
"Together," Israel Bonds president Israel Maimon said in a statement, "we can realize another outstanding year as we play a direct, personal role in perpetuating Israel's extraordinary legacy of redefining what is possible."
In 2017, Kansas lawmakers approved a law forbidding the state and its agencies from entering into contracts with an individual or company with entities unwilling to affirm in writing no involvement in a boycott, divestment or sanction against Israel. The "anti-BDS" law was in response to a movement protesting Israel's policies toward Palestinians.
A Kansas judge, pointing to free speech rights, blocked the state law in 2018 after the American Civil Liberties Union filed a lawsuit. The Kansas Legislature responded by amending the statute to exclude individuals from the mandate, and the ACLU suit was dismissed.
"We have made the statement that we are supportive of Israel with the anti-BDS legislation," LaTurner said. "I think this naturally follows that."