45th legislature - STATE OF NEW MEXICO - second session, 2002

RELATING TO WATER; CREATING THE LOWER PECOS BASIN WATER PRESERVATION DISTRICT; AUTHORIZING THE IMPOSITION OF A LOWER PECOS BASIN WATER PRESERVATION GROSS RECEIPTS TAX; IMPOSING A SURCHARGE ON CERTAIN WATER USERS; AUTHORIZING THE NEW MEXICO FINANCE AUTHORITY TO ISSUE REVENUE BONDS; AUTHORIZING SEVERANCE TAX BONDS; MAKING APPROPRIATIONS FOR PROJECTS TO CONSERVE WATER AND TO PROTECT AND RETIRE WATER RIGHTS IN THE BASIN.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 21 of this act may be cited as the "Lower Pecos Basin Water Preservation District Act".

Section 2. [NEW MATERIAL] FINDINGS AND PURPOSE.--

A. The legislature finds that:

(1) a severe imbalance exists among water right holders, New Mexico obligations under the Pecos River Compact and water supply in the lower Pecos river basin of New Mexico;

(2) the imbalance is threatening the economic well-being of the state and the four counties comprising the lower Pecos basin and is causing undue hardship to the state and for all residents in the four counties;

(3) a mechanism needs to be in place to protect water rights, retire water rights and conserve water so that a balance will be restored between all water uses and water supply in the lower Pecos river basin;

(4) the costs for correcting the imbalance, protecting the water rights and conserving the water should be borne, in part, by the persons who will most benefit;

(5) the creation of the special district and the assessments and taxes imposed pursuant to the Lower Pecos Basin Water Preservation District Act will serve a public use and will promote the health, safety, prosperity, security and general welfare of the inhabitants of the district and of the state;

(6) the provisions of the Lower Pecos Basin Water Preservation District Act and the actions authorized by that act will be a special benefit to the residents of the district; and

(7) a general law cannot be made applicable to the lower Pecos basin because of the number of atypical and special conditions and problems associated with it.

B. The purpose of the Lower Pecos Basin Water Preservation District Act is to create a special district in which gross receipts taxes are levied to provide a funding source so that the economic viability of the district and its residents can be restored, protected and strengthened.

Section 3. [NEW MATERIAL] DEFINITIONS.--As used in the Lower Pecos Basin Water Preservation District Act:

A. "authority" means the New Mexico finance authority;

B. "board" means the board of directors of the lower Pecos basin water preservation district;

C. "department" means the taxation and revenue department; and

D. "district" means the lower Pecos basin water preservation district.

Section 4. [NEW MATERIAL] WATER PRESERVATION DISTRICT CREATED--BOARD OF DIRECTORS--APPOINTMENT--DUTIES.--

A. The "lower Pecos basin water preservation district" is created. The district is comprised of the area encompassing Eddy, Chaves, Lincoln and De Baca counties, except that the portion of Lincoln county that lies within an incorporated municipality and outside of the Pecos river drainage, as determined by the state engineer, shall be excluded from the district.

B. The district shall be governed by a board of directors consisting of:

(1) one member appointed by the board of county commissioners of each county included in the district, who shall be a resident of that county;

(2) one member appointed by the governing body of each irrigation district, each conservancy district and each artesian conservancy district wholly or partly located in the lower Pecos basin water preservation district; and

(3) the state engineer or his designee.

C. Members shall be appointed for terms of three years, except that the initial appointed members from Lincoln and De Baca counties shall be appointed for a one-year term.

D. A public member of the board shall be reimbursed by the county or district that he represents at rates provided in the Per Diem and Mileage Act and shall receive no other compensation, perquisite or allowance.

E. The board shall elect a chair and such other officers as necessary to perform its duties.

F. The board shall meet at the call of the chair, except that:

(1) the board shall hold its initial meeting prior to July 1, 2002; and

(2) the board shall meet not less than once each fiscal year.

G. The board shall:

(1) review projects, proposed by the state engineer, to be funded pursuant to the Lower Pecos Basin Water Preservation District Act and recommend any additions, deletions and other changes to the proposal;

(2) review the status of projects being completed with expenditures of the bond proceeds; and

(3) advise the state engineer on the need for future projects and the need for continuing the surcharge and taxes imposed pursuant to the Lower Pecos Basin Water Preservation District Act.

H. The exercise of any power or duty granted to the district or board shall not duplicate or infringe upon any power or duty of any irrigation district, conservancy district or artesian conservancy district wholly or partly located in the lower Pecos basin water preservation district.

Section 5. [NEW MATERIAL] LOWER PECOS BASIN WATER PRESERVATION GROSS RECEIPTS TAX--IMPOSITION--ELECTION--EFFECTIVE DATE--COMPLIANCE WITH GROSS RECEIPTS AND COMPENSATING TAX ACT AND REQUIREMENTS OF DEPARTMENT--SUBMISSION OF COPY TO DEPARTMENT.--

A. A majority of the board may enact a resolution imposing an excise tax on any person engaging in business in the district for the privilege of engaging in business. The tax shall be known as the "lower Pecos basin water preservation gross receipts tax". The rate of the tax shall be three-sixteenths of one percent of the gross receipts of the person engaging in business.

B. The resolution shall not go into effect until after an election is held and a simple majority of the qualified electors of the district voting in the election votes in favor of imposing the lower Pecos basin water preservation gross receipts tax. The board shall adopt a resolution calling for an election within seventy-five days of the date the resolution is adopted on the question of imposing the tax. The question shall be submitted to the qualified electors and voted upon in a special election called for that purpose by the board. A special election upon the question shall be called, held, conducted and canvassed in substantially the same manner as provided by law for general elections. Costs of a special election shall be paid from the New Mexico irrigation works construction fund and so much of that fund as is needed for the election is appropriated to the interstate stream commission. If the question of imposing a lower Pecos basin water preservation gross receipts tax fails, the board shall not again propose a lower Pecos basin water preservation gross receipts tax for a period of one year after the election. A certified copy of any resolution imposing the lower Pecos basin water preservation gross receipts tax shall be mailed to the department within five days after the resolution is adopted in any election called for that purpose.

C. The resolution proposing the lower Pecos basin water preservation gross receipts tax shall adopt by reference the same definitions and the same provisions relating to exemptions and deductions as are contained in the Gross Receipts and Compensating Tax Act then in effect and as it may be amended from time to time.

D. The board, when proposing the lower Pecos basin water preservation gross receipts tax, shall adopt the model resolution with respect to the tax furnished to the board by the department.

Section 6. [NEW MATERIAL] LOWER PECOS BASIN WATER PRESERVATION GROSS RECEIPTS TAX--SPECIFIC EXEMPTIONS.--The lower Pecos basin water preservation gross receipts tax shall not be imposed on the gross receipts arising from transporting for hire persons or property by railroad, motor vehicle, air transportation or any other means from one point within the district to another point outside the district, nor is the tax imposed on direct satellite broadcasting or on gross receipts that are exempt by federal law.

Section 7. [NEW MATERIAL] LOWER PECOS BASIN WATER PRESERVATION GROSS RECEIPTS TAX--COLLECTION BY DEPARTMENT--TRANSFER OF PROCEEDS--DEDUCTION.--

A. The department shall collect the lower Pecos basin water preservation gross receipts tax in the same manner and at the same time as it collects the state gross receipts tax.

B. The department may deduct an amount not to exceed three percent of the lower Pecos basin water preservation gross receipts tax as a charge for the administrative costs of collection.

C. The department shall transfer to the lower Pecos basin water preservation bonding fund the amount collected from the lower Pecos basin water preservation gross receipts tax, less any disbursement for administrative charges made pursuant to Subsection B of this section, tax credits, refunds and the payment of interest applicable to the tax. The transfer to the fund shall be made within the month following the month in which the tax is collected.

Section 8. [NEW MATERIAL] LOWER PECOS BASIN WATER PRESERVATION GROSS RECEIPTS TAX--ADMINISTRATION AND ENFORCEMENT OF ACT.--

A. The department shall interpret the provisions of the Lower Pecos Basin Water Preservation District Act with respect to the lower Pecos basin water preservation gross receipts tax imposed under that act.

B. The department shall administer and enforce the collection of the lower Pecos basin water preservation gross receipts tax, and the Tax Administration Act applies to the administration and enforcement of the lower Pecos basin water preservation gross receipts tax.

Section 9. [NEW MATERIAL] LOWER PECOS BASIN WATER PRESERVATION GROSS RECEIPTS TAX--TERMINATION.--The lower Pecos basin water preservation gross receipts tax shall terminate on the July 1 or January 1 occurring after three months from the date that the department is notified that the authority has made a determination pursuant to Section 11 of the Lower Pecos Basin Water Preservation District Act that future expenditures from the lower Pecos basin water preservation bonding fund are not needed.

Section 10. [NEW MATERIAL] AUTHORITY MAY ISSUE LOWER PECOS BASIN WATER PRESERVATION REVENUE BONDS--APPROPRIATION OF PROCEEDS.--The authority is authorized to issue and sell revenue bonds, known as "lower Pecos basin water preservation revenue bonds", payable solely from the lower Pecos basin water preservation bonding fund, in compliance with the Lower Pecos Basin Water Preservation District Act for the purpose of funding projects pursuant to Section 20 of the Lower Pecos Basin Water Preservation District Act when the interstate stream commission certifies the need for the issuance of the bonds. The authority shall schedule the issuance and sale of the bonds in the most expeditious and economical manner possible upon a finding by the authority that the projects can proceed within a reasonable time. The authority shall further take the appropriate steps necessary to comply with the Internal Revenue Code of 1986, as amended. Proceeds from the sale of the bonds are appropriated to the interstate stream commission for expenditure in fiscal year 2003 and subsequent fiscal years for the purpose of completing projects pursuant to Section 2O of the Lower Pecos Basin Water Preservation District Act.

Section 11. [NEW MATERIAL] LOWER PECOS BASIN WATER PRESERVATION BONDING FUND CREATED--MONEY IN THE FUND PLEDGED.--

A. The "lower Pecos basin water preservation bonding fund" is created as a special fund within the authority. The fund shall be administered by the authority as a special account. The fund shall consist of money appropriated to the fund and gross receipts tax revenues distributed to the fund by law. Earnings of the fund shall be credited to the fund. Balances in the fund at the end of any fiscal year shall remain in the fund, except as provided in this section.

B. Money in the lower Pecos basin water preservation bonding fund is pledged for the payment of principal and interest on all lower Pecos basin water preservation revenue bonds issued pursuant to the Lower Pecos Basin Water Preservation District Act. Money in the fund is appropriated to the authority for the purpose of paying debt service, including redemption premiums, on the lower Pecos basin water preservation revenue bonds and the expenses incurred in the issuance, payment and administration of the bonds.

C. On the last day of January and July of each year, the authority shall estimate the amount needed to make debt service and other payments during the next twelve months from the lower Pecos basin water preservation bonding fund on the lower Pecos basin water preservation revenue bonds issued pursuant to the Lower Pecos Basin Water Preservation District Act plus the amount that may be needed for any required reserves. The authority shall transfer to the Pecos River Compact compliance fund any balance in the lower Pecos basin water preservation bonding fund above the estimated amounts.

D. Upon a determination by the interstate stream commission pursuant to Section 21 of the Lower Pecos Basin Water Preservation District Act that expenditures from the proceeds of lower Pecos basin water preservation revenue bonds are no longer needed and upon the certification by the authority that all lower Pecos basin water preservation revenue bonds issued pursuant to the Lower Pecos Basin Water Preservation District Act have been retired, that no additional obligations of the lower Pecos basin water preservation bonding fund exist and that no additional expenditures from the fund are necessary, the interstate stream commission shall notify, in writing, the board, the board of county commissioners of each county within the district and the department. Upon the termination and final distribution of revenues from the lower Pecos basin water preservation gross receipts tax imposed pursuant to the Lower Pecos Basin Water Preservation District Act, the lower Pecos basin water preservation bonding fund shall be dissolved and any remaining balance in the fund shall be transferred to the Pecos River Compact compliance fund.

E. The lower Pecos basin water preservation revenue bonds issued pursuant to the Lower Pecos Basin Water Preservation District Act shall be payable solely from the lower Pecos basin water preservation bonding fund or, with the approval of the bondholders, such other special funds as may be provided by law and do not create an obligation or indebtedness of the state or any of its political subdivisions within the meaning of any constitutional provision. No breach of any contractual obligation incurred pursuant to that act shall impose a pecuniary liability or a charge upon the general credit or taxing power of the state or its political subdivisions, and the bonds are not general obligations for which the state's or its political subdivisions' full faith and credit are pledged.

F. The state does hereby pledge that the lower Pecos basin water preservation bonding fund shall be used only for the purposes specified in this section and pledged first to pay the debt service on the lower Pecos basin water preservation revenue bonds issued pursuant to the Lower Pecos Basin Water Preservation District Act. The state further pledges that any law imposing or authorizing a tax, the revenue from which is pledged to retire the lower Pecos basin water preservation revenue bonds or any law authorizing the distribution of taxes or other revenues to the lower Pecos basin water preservation bonding fund or authorizing expenditures from the fund shall not be amended or repealed or otherwise modified so as to impair the bonds to which the lower Pecos basin water preservation bonding fund is dedicated as provided in this section.

Section 12. [NEW MATERIAL] AUTHORITY TO REFUND BONDS.--The authority may issue and sell at public or private sale lower Pecos basin water preservation revenue bonds to refund outstanding lower Pecos basin water preservation revenue bonds by exchange, immediate or prospective redemption, cancellation or escrow, including the escrow of debt service funds accumulated for payment of outstanding bonds, or any combination thereof when, in its opinion, such action will be beneficial to the state.

Section 13. [NEW MATERIAL] LOWER PECOS BASIN WATER PRESERVATION REVENUE BONDS--FORM--EXECUTION.--

A. The authority, except as otherwise specifically provided in the Lower Pecos Basin Water Preservation District Act, shall determine at its discretion the terms, covenants and conditions of lower Pecos basin water preservation revenue bonds, including, but not limited to, date of issue, denominations, maturities, rate or rates of interest, call features, call premiums, registration, refundability and other covenants covering the general and technical aspects of the issuance of the bonds.

B. Lower Pecos basin water preservation revenue bonds shall be in such form as the authority may determine, and successive issues shall be identified by alphabetical, numerical or other proper series designation.

C. Lower Pecos basin water preservation revenue bonds shall be signed and attested by the secretary of the authority and shall be executed with the facsimile signature of the chairman of the authority and the facsimile seal of the authority, except for bonds issued in book entry or similar form without the delivery of physical securities. Any interest coupons attached to the bonds shall bear the facsimile signature of the secretary of the authority, which officer, by the execution of the bonds, shall adopt as his own signature the facsimile thereof appearing on the coupons. Except for bonds issued in book entry or similar form without the delivery of physical securities, the Uniform Facsimile Signature of Public Officials Act shall apply, and the authority shall determine the manual signature to be affixed on the bonds.

Section 14. [NEW MATERIAL] PROCEDURE FOR SALE OF BONDS.--

A. Lower Pecos basin water preservation revenue bonds shall be sold by the authority at such times and in such manner as the authority may elect, consistent with the need of the interstates stream commission, either at private sale for a negotiated price or to the highest bidder at public sale for cash at not less than par and accrued interest.

B. In connection with any public sale of lower Pecos basin water preservation revenue bonds, the authority shall publish a notice of the time and place of sale in a newspaper of general circulation in the state and also in a recognized financial journal outside the state. Such publication shall be made once each week for two consecutive weeks prior to the date fixed for such sale, the last publication to be two business days prior to the date of sale. Such notice shall specify the amount, denomination, maturity and description of the bonds to be offered for sale and the place, day and hour at which sealed bids therefor shall be received. All bids, except that of the state, shall be accompanied by a deposit of two percent of the principal amount of the bonds. Deposits of unsuccessful bidders shall be returned upon rejection of the bid. At the time and place specified in such notice, the authority shall open the bids in public and shall award the bonds, or any part thereof, to the bidder or bidders offering the best price. The authority may reject any or all bids and readvertise.

C. The authority may sell a lower Pecos basin water preservation revenue bond issue, or any part thereof, to the state or to one or more investment bankers or institutional investors at private sale.

Section 15. [NEW MATERIAL] LOWER PECOS BASIN WATER PRESERVATION DISTRICT ACT IS FULL AUTHORITY FOR ISSUANCE OF BONDS--BONDS ARE LEGAL INVESTMENTS.--

A. The Lower Pecos Basin Water Preservation District Act shall, without reference to any other act of the legislature, be full authority for the issuance and sale of lower Pecos basin water preservation revenue bonds, which bonds shall have all the qualities of investment securities under the Uniform Commercial Code and shall not be invalid for any irregularity or defect or be contestable in the hands of bona fide purchasers or holders thereof for value.

B. Lower Pecos basin water preservation revenue bonds are legal investments for any person or board charged with the investment of any public funds and are acceptable as security for any deposit of public money.

Section 16. [NEW MATERIAL] SUIT MAY BE BROUGHT TO COMPEL PERFORMANCE.--Any holder of lower Pecos basin water preservation revenue bonds or any person or officer being a party in interest may sue to enforce and compel the performance of the provisions of the Lower Pecos Basin Water Preservation District Act.

Section 17. [NEW MATERIAL] BONDS TAX EXEMPT.--All lower Pecos basin water preservation revenue bonds shall be exempt from taxation by the state or any of its political subdivisions.

Section 18. [NEW MATERIAL] PECOS RIVER COMPACT COMPLIANCE FUND--CONTINUING APPROPRIATION.--

A. The "Pecos River Compact compliance fund" is created in the state treasury. The fund shall consist of money transferred to the fund from the lower Pecos basin water preservation bonding fund, revenue from the surcharge imposed pursuant to Section 19 of the Lower Pecos Basin Water Preservation District Act and appropriations made to the fund. Earnings of the fund shall be credited to the fund, and balances in the fund shall not revert or be transferred to any other fund. Except as provided in Subsection B of this section, the fund is appropriated to the interstate stream commission for the purpose of carrying out the provisions of the Lower Pecos Basin Water Preservation District Act.

B. One million five hundred thousand dollars ($1,500,000) is appropriated from the Pecos River Compact compliance fund each fiscal year from fiscal year 2003 through fiscal year 2012 to the interstate stream commission for the purpose of contracting with the board of regents of New Mexico state university to conduct a program upland watershed restoration, alien phreatophyte removal with native vegetation reestablishment and other water salvage activities in the lower Pecos river basin. Any unexpended or unencumbered balance remaining at the end of each fiscal year shall revert to the Pecos River Compact compliance fund.

Section 19. [NEW MATERIAL] SURCHARGE--ADDITIONAL NET DEPLETIONS--PECOS RIVER.--

A. At any time after January 1, 2003, the state engineer may impose and collect an annual surcharge on additional net depletions of Pecos River system irrigation water in the Pecos river surface water drainage downstream of Sumner dam. The surcharge shall not exceed two hundred dollars ($200) per acre-foot of the additional net depletions. Revenue from the surcharge shall be deposited in the Pecos River Compact compliance fund.

B. As used in this section, "additional net depletions" means the depletions, above those taken in calendar year 1990, that:

(1) do not result from normal reservoir and irrigation district operations incidental to the exercise of valid water rights; and

(2) are not approved as a conservation measure by the interstate steam commission or authorized by a permit from the state engineer.

Section 20. [NEW MATERIAL] INTERSTATE STREAM COMMISSION--EXPENDITURES FOR PROJECTS--SALE OF WATER RIGHTS.--

A. The interstate stream commission, after consultation with the board, the authority and the state board of finance, shall determine the need for projects and how funding for the projects shall be allocated between proceeds from severance tax bonds, proceeds from lower Pecos basin water preservation revenue bonds or appropriations from the Pecos River Compact compliance fund. Expenditure of the proceeds and appropriations shall be made only within the Pecos river basin downstream from the Sumner dam for projects that:

(1) protect water rights, retire water rights or include other measures designed to correct the imbalances among water right holders, New Mexico obligations under the Pecos River Compact and water supply of the lower Pecos river basin; or

(2) are designed for water conservation, including restoration of native vegetation and other water supply enhancement measures.

B. If, at any time, the interstate stream commission determines that the total water rights purchased with bond revenues or appropriations pursuant to this section are in excess of those water rights permanently needed for compliance with New Mexico's obligations under the Pecos River Compact, then the commission shall offer the excess water rights for sale to the private sector. By rule, the commission shall establish procedures for the sale, and any revenue received as a result of the sale shall be deposited in the Pecos River Compact compliance fund.

Section 21. [NEW MATERIAL] DETERMINATION OF SUFFICIENT EXPENDITURES--NOTIFICATION.--The interstate stream commission, after consulting with the board, may determine that the water rights within the lower Pecos river basin are no longer out of balance, that no further water conservation projects are needed within the district, that no further expenditures are needed from the proceeds of lower Pecos basin water preservation revenue bonds and that no additional revenue is needed in the Pecos River Compact compliance fund. Upon such a determination, the commission shall notify the authority pursuant to Section 11 of the Lower Pecos Basin Water Preservation District Act.

Section 22. AUTHORIZATION FOR SEVERANCE TAX BONDS--APPROPRIATION OF PROCEEDS FOR PROJECTS.--

A. The state board of finance may issue and sell severance tax bonds in fiscal years 2003 through 2005 in compliance with the Severance Tax Bonding Act in an amount not exceeding a total of twenty-four million dollars ($24,000,000) when the interstate stream commission certifies the need for the issuance of the bonds; provided that no more than eight million dollars ($8,000,000) may be issued in any one fiscal year. The state board of finance shall schedule the issuance and sale of the bonds in the most expeditious and economical manner possible upon a finding by the board that the projects have been sufficiently developed to justify the issuance and that the projects can proceed to contract within a reasonable time. The state board of finance shall further take the appropriate steps necessary to comply with the federal Internal Revenue Code of 1986, as amended. The proceeds from the sale of the bonds are appropriated to the interstate stream commission for the purpose of financing projects pursuant to the provisions of the Lower Pecos Basin Water Preservation District Act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2007 shall revert to the severance tax bonding fund. If the interstate stream commission has not certified the need for the issuance of the bonds by the end of fiscal year 2004, the authorization provided in this section shall expire.

B. No certification shall be made by the interstate stream commission pursuant to Subsection A of this section unless:

(1) the commission has entered into contracts with the governing body of the Carlsbad irrigation district and with the governing body of the Pecos valley artesian conservancy district that specify the actions to be taken or avoided by each party to ensure that the expenditure of the bond proceeds by the interstate stream commission will be effective toward compliance with New Mexico's obligations under the Pecos River Compact; and

(2) the board of directors of the lower Pecos basin water preservation district has proposed, and the people residing in the district have adopted, a lower Pecos basin water preservation gross receipts tax pursuant to the provisions of the Lower Pecos Basin Water Preservation District Act.

Section 23. A new section of the Tax Administration Act is enacted to read:

"[NEW MATERIAL] DISTRIBUTION--LOWER PECOS BASIN WATER PRESERVATION GROSS RECEIPTS TAX.--A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the lower Pecos basin water preservation bonding fund in the amount equal to the net receipts attributable to the lower Pecos basin water preservation gross receipts tax imposed by the Lower Pecos Basin Water Preservation District Act."

Section 24. SEVERABILITY.--If any part of application of the Lower Pecos Basin Water Preservation District Act is held invalid, the remainder or its application to other situations or persons shall not be affected.