NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

The most recent FIR version (in HTML & Adobe PDF formats) is available on the Legislative Website.  The Adobe PDF version includes all attachments, whereas the HTML version does not.  Previously issued FIRs and attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

 

 

F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

Maes

 

DATE TYPED:

3/06/03

 

HB

 

 

SHORT TITLE:

Transfer of Public Money

 

SB

548/aSFl#1/aSFl#2

 

 

ANALYST:

Smith

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

 

(100,000.0)

 

 

General Fund Operating Reserve

 

100,000.0

 

 

Other State Funds

(Parenthesis ( ) Indicate Revenue Decreases)

 

SOURCES OF INFORMATION

 

No Response Received From Department of Finance and Administration (DFA)

 

SUMMARY

 

     Synopsis of SFl#1 & SFl#2 Amendments

 

Senate Floor Amendment #1 provides for prior LFC review of transfers. Senate Floor Amendment 2 requires that money be transferred only by a specific act of the Legislature. Neither of these amendments are sufficient to negate the concerns addressed below.

    

Synopsis of Original Bill

 

Senate Bill 548 gives the Department of Finance and Administration (DFA) the authority to transfer public money to or from the general fund or any other public funds, without specific appropriations by the Legislature. The provisions do not apply to constitutionally established or regulated trust funds.

 

FISCAL IMPLICATIONS

 

The fiscal impact of this bill could be significant. The numbers in the revenue box are simply a placeholder to indicate how broadly this bill can be interpreted.  For example, the general fund operating reserve would qualify as a fund eligible to be depleted or increased.  An analysis from DFA is important to assess the effects of this bill.

 

TECHNICAL ISSUES

 

  • This bill changes law by reference and may possibly have constitutional questions.

 

  • The phrase “upon legislative authorization” is unclear in its meaning and effect.

 

  • The bill does not exempt bond debt service reserve funds and therefore could conflict with existing bond covenants.

 

OTHER SUBSTANTIVE ISSUES

 

  • This bill would likely interfere with the Legislature’s constitutional prerogative to appropriate money.  While the Legislature must appropriate both special and general government funds, they are limited by the availability of financial resources.  Unlike the federal government, the New Mexico government can not print money. Therefore, an effect of this bill could be to thwart the power of the Legislature and the appropriation process.

 

  • This proposal could also authorize the Executive to spend money in excess of that anticipated by the legislature. Section 6-10-42, NMSA 1978 allows limited transfer authority to remedy short run cash flow problems within the fiscal year. In addition, the Legislature routinely gives the Executive means to transfer a set amount from the general fund operating reserve to the appropriation account to make up revenue shortfalls in the general appropriation act. This transfer authority is necessarily limited; the intent is that larger shortfalls should necessitate corrective action on the part of the Legislature and Executive. This bill could conceivably “short circuit” this process.

 

  • The Executive narrowly avoided exceeding its transfer authority at the end of FY02.  This proposal may be in response to this situation. Testimony from the DFA would be help the Legislature understand the intent of this bill.

 

  • A list of affected funds is attached.

 

POSSIBLE QUESTIONS

 

If a fund is depleted, what is the status of previously authorized appropriations?

 

SS/yr/njw

Attachment