Could Texas soon have the golden touch?

Posted Monday, May. 13, 2013  comments  Print Reprints

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More bills on metals Other legislation pending in the Legislature that addresses precious metals includes: HB 78: A proposal to remove the sales tax on purchases of precious-metal coins and bullion. The bill, by state Rep. David Simpson, R-Longview, has passed the House and has been referred to the Senate Finance Subcommittee on Fiscal Matters. HB 544 — A measure to correct a 2001 bill making theft of a penny a felony. The new bill, by Rep. Tim Kleinschmidt, R-Lexington, states that enhanced criminal penalties would outline offenses — for example, a Class C misdemeanor for property value of $50. This bill was left pending in a House committee.

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Call it the Texas gold rush.

State Rep. Giovanni Capriglione is racing against the clock to find a way to move forward his proposal to create a Texas Bullion Depository — and bring back to Texas the state’s gold that is currently stored in a New York vault.

With two weeks left in the legislative session, Capriglione, R-Southlake, is hoping he can attach his proposal to another bill on its way to the Texas Senate, trying to hit pay dirt in the upper chamber.

“We’re running out of time,” Capriglione said. “We have billions of dollars of our own gold.

“There would be no place in the world safer to store precious metals than in the state of Texas’ depository.”

The goal of the measure is to create a Texas Bullion Depository, a secure facility to store around $1 billion of gold bars owned by the University of Texas Investment Management Co. that are housed in New York.

The depository could also hold other deposits of gold or precious metals from financial institutions, cities, school districts, businesses, individuals and countries.

The idea has drawn support from officials ranging from former U.S. Rep. Ron Paul of Texas, who has voiced concern about the safety of gold supplies, to Gov. Rick Perry, who has said Texas is in the process of “bringing gold that belongs to the state of Texas back into the state.”

“If we own it,” Perry has said, “I will suggest to you that that’s not someone else’s determination whether we can take possession of it back or not.”

Political observers say the motivation behind Capriglione’s proposal is clear.

“There is a strong feeling that Texas assets ought to be in Texas and I appreciate that from the perspective of sound money policy,” said Jim Riddlesperger, a political science professor at TCU. “But Texas assets have been safe and there’s no reason to think they would not be secure going into the future.”

‘Safe haven’

Capriglione filed his bill earlier in the session after hearing Perry speak about the state’s gold investments during a local Tea Party event.

“Given the cost that the state is already spending to store the gold, this is a great way to save money,” he said. “Also, it creates an economic development opportunity.

“We have gotten hundreds of emails from people all over the country saying they’d rather put their gold in a vault in the state of Texas than anywhere else because it’s a safe haven in a safe state,” he said. “It makes a lot of sense.”

But some question why there are concerns about the state’s gold — which has been safe in New York for so long — that now prompt a need for it to be moved.

“It seems kind of far-fetched,” said Pete Locke, a finance professor at TCU. “I don’t see why Texas would be safer than any other place.

“It seems kind of unnecessary to me.”

Capriglione said a depository could be created — possibly in Dallas-Fort Worth — to store the state’s gold.

During a committee hearing last month, the proposal drew support from a variety of Texas groups, including Texans For Accountable Government, the Texas Eagle Forum, Texas chapters of the John Birch Society and Texas Sound Money. No opposition was registered to the bill.

Some Democrats have suggested this is not a crucial issue to be addressed this session and should wait for another time.

Capriglione said the bill was crafted to protect the contents of the depository from the federal government and other countries.

“We’ve constructed this in such a way that any gold you store in the vault would be protected by the state of Texas,” he said.

He has met with Perry and said he hopes the governor can help ease the bill through the legislative path.

Gold fever

To bring the gold home to Texas, there would have to be a secure place to house it.

Capriglione’s original bill stalled in the House Appropriations Subcommittee on Budget Transparency and Reform after the Legislative Budget Board attached a fiscal note to the bill saying it would cost $14.2 million for technology, software and hardware acquisition and ongoing maintenance and upgrades through Aug. 31, 2015.

Capriglione said the cost was “clearly overstated.”

Plus, he said it didn’t note any positive revenues, such as money the state would generate from charging government agencies and individuals to store gold in a Texas depository.

The estimate says it would require “significant research and analysis” to create a precious metal bullion depository and assess how to acquire a secure vault. And it says it would be necessary to hire 71 full-time employees to work at such a depository.

“We can outsource this,” Capriglione said. “It can be done in my opinion for about $250,000 total a year. Their estimate was $4 million to $5 million.”

And he said storing gold and the like in a Texas depository could generate $20 million to $100 million a year for the state.

“People would ship their gold here to store it,” he said.

Either way, Capriglione added an amendment to another bill last week asking the comptroller to do a cost-benefit analysis to show the “real and true expenses” and potential revenue for a Texas bullion depository. The bill that includes his amendment is headed to the Senate for consideration.

If this becomes law, the study would be due to the legislature no later than Aug. 31, 2014.

But Capriglione has his eye on a finance bill he hopes to attach his bullion depository proposal to as an amendment in the coming days, to get it to the Senate.

“The worst case scenario is that we get it done next session,” he said. “The best scenario is that we get it done this session and get it into the Senate riding another bill.”

The session ends May 27.

Anna M. Tinsley, 817-390-7610 Twitter: @annatinsley

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