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SPONSOR: |
Varela |
DATE TYPED: |
|
HB |
494/aHFl#1 |
||
SHORT TITLE: |
Economic Development Corporation Act |
SB |
|
||||
|
ANALYST: |
Padilla |
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APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
NFI
– but see HB 493 |
|
See Narrative |
|
|
(Parenthesis
( ) Indicate Expenditure Decreases)
Companion to HB 493, which
contains a $3,000.0 appropriation for the purposes of carrying out this bill.
Duplicates HB 589 in most respects
Relates
to Appropriation in the General Appropriation Act
Responses
Received From
Economic
Development Department
Attorney
General’s Office
Department
of Finance and Administration
General
Services Department
SUMMARY
Synopsis
of House Floor Amendment #1
The amendment strikes language that would have
exempted the corporation from open meetings and public records laws. It provides, however, that when proprietary
business information or information related to a business
relocation is involved, meetings can still be closed or information kept
confidential.
Significant
Issues
The amendment appears to address concerns of the
Attorney General’s Office related to the corporation’s accountability (see
“Significant Issue 3” below). By
allowing for some continued confidentiality, as the amendment does, EDD
believes the corporation will have a means to protect proprietary and confidential
information of a business, such as financial statements. EDD points out that language in EDD’s authorizing statute provides similar provisions for
the department.
Synopsis
of Original Bill
House Bill 494 creates a new non-profit
corporation to carry out activities related to economic development. The bill creates a 15-member Board of
Directors and gives the board the power to hire a president to the
corporation’s activities. The corporation’s purposes are explained in Section 2
and its duties are outlined in Section 5.
The bill gives the board certain powers, including the power to hire
officers and staff as it deems necessary.
The programmatic functions of the corporation
are to:
Section 6 of the bill makes the corporation
“separate and apart from the state” and says that it shall not be deemed an
agency, public body or other subdivision of New Mexico for purposes of applying
various state government laws, such as personnel laws, per diem and mileage,
procurement, etc. The bill grants the
corporation and its officers, directors and employees immunity from torts under
the Tort Claims Act and allows them to purchase insurance even though a covered
loss may also be covered by the state’s risk management fund.
DFA notes that this bill is an initiative of the
Governor.
2. Although the bill states that the corporation would not be subject to laws governing state government entities, the AG’s office believes otherwise, stating “the fact that it is created by the legislature renders it a quasi-governmental agency and thus subject to all of the limitations contained in the state constitution, including the anti-donation clause.” The corporation could not give gifts, donations or grants to any private entity.
3. Two issues arise relating to accountability. First, the AG’s office is concerned that exempting the corporation from open meetings and public records laws, as the bill does, removes public accountability and is contrary to the underlying principles of open government. It may also render the corporation a private entity, and thus in violation of the state constitution. Second, because the corporation would be funded through means of a large contract, ensuring accountability would be the responsibility of both the Board and the EDD contract manager.
4. It is
unclear if this bill is intended to replace current EDD functions or to
supplement them. The duties of the
corporation relate to a considerable extent to the current responsibilities and
programs of EDD under its enabling act (Section
·
Actively encourage new economic enterprises to
locate in
·
Serve as a comprehensive source of information
and assistance to businesses wishing to expand or locate to
Section
· Assisting in gathering information on local and regional assets.
· Assisting in the establishment of programs to attract new labor forces or training local labor forces.
· Identifying barriers to local or regional economic development and developing plans to overcome such barriers.
According to EDD and DFA, however, the new corporation will allow EDD to outsource its external recruitment and marketing functions. Currently there are approximately nine FTEs at EDD (six recruiters and three marketing staff) focused on business recruitment and marketing. The corporation’s duties also appear to relate directly to some of the responsibilities of EDD’s Community Development Program.
5. A number of existing EDD programs also relate
to the functions of the corporation.
Over the last several years, for example, the Community Development
Program has conducted “community assessments” of most of
This bill does not contain an
appropriation. House Bill 493 is a
companion to this bill, however, and contains an appropriation of $3,000.0 from
the general fund.
EDD notes that it must have “adequate” funding
in order to partner and coordinate EDD’s efforts with those of the new
corporation. It did not provide any specific funding information, however. EDD’s FY03 general fund budget was
$6,001.5.
If the AG’s office provides counsel to the
corporation, it reports that the fiscal implications would be approximately
$50.0 a year.
ADMINISTRATIVE IMPLICATIONS
This bill, combined with HB 493, creates a
significant administrative challenge for EDD.
RELATIONSHIP
House Bill 493 is the companion to this
bill. It appropriates $3,000.0 from the
general fund to EDD for the purpose of contracting with the corporation.
This bill duplicates HB 589 in most respects
except the following:
This bill relates to the EDD appropriation in
the General Appropriation Act.
OTHER SUBSTANTIVE ISSUES
Other states use the model of an economic
development corporation. For
example:
LP/yr:sb