NOTE: As provided in LFC policy, this report is intended 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 in any other situation.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Suite 101 of the State Capitol Building North.

* See fiscal impact section for additional information.

SOURCES OF INFORMATION

LFC File

SUMMARY

Synopsis of Senate Finance Committee Amendment

On page 1, line 24, the Senate Finance Committee amendment changes reimbursement for every non-salaried public officer from $95.00 to $85.00.

Synopsis of HAFC Substitute for House Bills 90 and 96

This bill amends language in Section 10-8-1 through 10-8-8 NMSA 1978 to increase per diem and mileage rates as follows:

In-State Travel

• •Per diem allowance for non-salaried public officers is increased to $95.00 from $75.00.
• •Per diem allowance for salaried public officers or employees is increased to $85.00 from $65.00.
• •If $85.00 is inadequate for reimbursement of expenses in a municipality of New Mexico, the per diem may be raised to $135.00.

Out-of-State Travel

• •Per diem allowance for salaried public officers or employees is increased to $115.00 from $75.
• •If $115.00 is inadequate for reimbursement of expenses in a geographical area, the per diem may be raised not to exceed $215.00.

General

• •The mileage reimbursement rate from travel in a privately owned vehicle is raised to $0.32 a mile from $0.25 and up to $0.88 a mile from $0.40 for each mile traveled in a privately owned airplane. A public officer or employee may receive the cost of the ticket in lieu of the mileage when traveling on a common carrier.
• •Reimbursement for actual meal expenses is increased not to exceed $30 per day from $22.50 for in-state travel.
• •Reimbursement for actual meal expenses is increased not to exceed $45 per day from $22.50 for out-of-state travel.
• •Reimbursement for actual expenses for lodging with prior approval is still allowable.
• •Provisions apply to public officers and employees of local public bodies, state agencies and public post-secondary educational institutions.

The increase would go into effect at the beginning of the next fiscal year on July 1, 2001.

Significant Issues

The bill proposes increased amounts to be reimbursed for per diem and mileage expenses but does not provide an appropriation to provide entities with the resources to do so. Although the total impact seems small in relation to the total budget, it must be viewed in relationship to each agency's budget. Critical travel may have to be curtailed or other savings identified to offset the increased cost, which may affect agency performance.

Several agencies indicated that the increased travel costs could be absorbed into their current FY02 budget which would help minimize the budgetary impact.

The proposed new rates would be closer to actual costs than current law allows. Agencies would pay more to those who travel on behalf of the state, but not as much as may be indicated by simple arithmetic. Since current daily rates often do not cover costs, many who travel on official business request actual expenses to avoid subsidizing their travel. Some people are reluctant to travel for the state when necessary to avoid incurring non-reimbursable expenses.

The proposed per diem and mileage reimbursement rates more accurately reflect the costs associated with business-related travel. They would have a positive impact on agency employees.

LFC staff surveyed the following states for comparative purposes: Texas, Arizona, Colorado, Utah and Louisiana. The federal government and the U.S. Postal Service were also surveyed.

The federal governments per diem rates are linked in detail to geographical location and time of year and range from $55 to $215 for lodging. Meal reimbursement, which is separate from lodging reimbursement, ranges from $30 to $46 per day. The federal mileage reimbursement is $0.325 per mile for travel in a privately owned automobile and $0.88 per mile for travel in a privately owned airplane. The U.S. Postal Service has adopted the federal rates.

Texas' in-state meal and lodging reimbursement rates begin at $25 and $70, respectively. The top end depends upon the reimbursement schedule adopted by the state comptroller. Out-of-state meals and lodging rates are tied to the federal reimbursement schedule adopted by the comptroller. Mileage reimbursement is limited to $0.28 per mile.

Arizona has a flat per diem rate for in-state meals ($29.50 per day). In-state lodging ranges from $55 through $107, depending upon location and season. Out-of-state meals and lodging range from $29.50 to $50 and from $55 to $215, respectively, depending on location and season. The mileage reimbursement rate is $0.325 per mile.

Colorado combines in-state and out-of-state meals and lodging. Meal allowances range from $30 per day to $46 per day. Reimbursement for lodging is reimbursed at the actual cost of reasonable accommodations. Colorado's mileage reimbursement rate is $0.28 per mile

.

At the time of the LFC staff survey, New Mexico's travel reimbursement rates were, in total, lower than all entities surveyed. Raising travel reimbursement rates to more closely reflect cost increases should have a salutary effect on employee retention and morale.

FISCAL IMPLICATIONS

The fiscal impact is estimated using the Budget Request System and the LFC base recommendation for the following line items:

Fiscal Impact Unexpended Budget Net Impact

General Fund Recurring $ 1,887.8 $964.1 $923.7

Federal Funds Recurring $ 1,448.9 $737.5 $711.4

OSF/ISF/IAT Recurring $ 1,173.1 $593.8 $579.3

The fiscal impact however would be further reduced from the above amounts for the following:

• •2001 Appropriation act proposes four categories for expenditure which will provide needed flexibility to agencies to monitor its travel budget and adjust it when needed. Hence it may minimize need for additional funding to implement increases in the per diem and mileage rates.



• •LFC review of thirty agencies fiscal year 2000 audit reports (Attachment A) disclose that many agencies adjusted travel budget exceeded actual expenditure thereby reducing fiscal impact of additional funding to implement increases in the per diem and mileage rates. The unexpended budget balances for in-state travel and out-of-state travel categories per FY2000 audit report for these agencies were $1,672.6 and $622.8 respectively; therefore, it is assumed for this analysis that many agencies will be able to absorb fiscal impact of increased per diem and mileage rates. However, it should be recognized that any unexpended amounts used by agencies to offset increased costs of per diem and mileage will reduce reversion to general fund.

ADMINISTRATIVE IMPLICATIONS

If an agency decides to reduce its administrative staff to divert additional funds to cover the costs of travel for other employees/non-salaried public officials, the agency's overall administrative capability would be lowered.

TECHNICAL ISSUES

In order to help contain costs, administrative rules could be amended to allow travel reimbursement only when expenses are incurred and use of Affidavits for Lost Receipt is minimized.

OTHER SUBSTANTIVE ISSUES

Not enacting this bill may make it more difficult for employees to travel on official business. It may also result in lower employee satisfaction and a decrease in agency productivity and efficiency.

Current per diem and mileage rates, which were last amended by Laws 1984, have been outstripped by inflation.

PERFORMANCE IMPLICATIONS

A particular agency's performance will depend on its ability to meet the extra travel expenses and to adjust other expenses accordingly. If this bill passes and employees are compensated for travel at reasonable rates, it may increase employee satisfaction, which ultimately results in increased individual productivity and an overall increase in an agency's performance.

Attachment

MP/sb:prr/sb