City Treasurer Ron Borucki acknowledged there were “no surprises” when he issued yet another dismal report for the city’s investment portfolio this week at City Hall.
“Balances are down, rate of return slipped a basis point and quarterly earnings are down,” Borucki told the City Council on Tuesday.
At $382 million, the portfolio fell $9 million compared to the prior period, continuing the slide it’s been on since interest rates became stuck at historically low levels.
The low interest rate environment — which impacts the city’s main investments: bonds — is likely to continue for another two or three years, Borucki said.
Last month, the council gave Borucki more flexibility to increase the amount of corporate bonds he can invest in. Corporate bonds can have bigger payoffs, but they are riskier than their government counterparts.
Interest earnings for the quarter ending in September were down $23,000 to $980,000 compared to the previous period. Earning less than $1 million doesn’t bode well for the city, which runs the risk of finishing the year below last year’s $4.3 million.
“If we’re running under a million per quarter, it’s going to be tough to see $4 million returned to the city coffers,” Borucki said.