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.

 

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

 

 

 

SPONSOR:

Salazar

 

DATE TYPED:

3/17/03

 

HB

80/aSCORC

 

SHORT TITLE:

Small Business Investment Corporation

 

SB

 

 

 

ANALYST:

Collard

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

 

 

See Narrative

 

 

 

 

 

 

 

 

(Parenthesis ( ) Indicate Expenditure Decreases)

 

Duplicates Senate Bill 10

 

SOURCES OF INFORMATION

 

1988 Albuquerque Journal Article

 

Responses Received From

State Investment Council

 

Responses Not Received From

Economic Development Department

 

SUMMARY

 

     Synopsis of SCORC Amendment

 

The Senate Corporations and Transportation Committee amendment to House Bill 80 inserts a new Section 8.  This section defines the corporation board of directors as the following individuals or their designee:  the state treasurer, the state investment officer and six members appointed by the governor.  The members shall serve at the pleasure of the governor.  The governor’s appointees will have general expertise in small business management, but cannot work with businesses receiving investments from the corporation.  Further, no two members can represent the same company, a chairman will be a member who is elected annually by the members, the board will set its policies and procedures, public members of the board will receive per diem, and the board will conduct an annual audit, which will be open to the public. 

 

The amendment also deletes a subsection that permits equity investments in New Mexico businesses that have loans guaranteed by the Unites States department of agriculture, the United States small business administration, or have a loan in conjunction with the United States small business administration.

 

OTHER SUBSTANTIVE ISSUES

 

It should be noted that New Mexico has tried this once before with the New Mexico Business Development Corporation (BDC) which was created by the Legislature in 1983 to provide development money to small and medium sized businesses in the state.  The BDC was a private, for-profit corporation.  The corporation quickly lost $10 million.

 

     Synopsis of Original Bill

 

House Bill 80 clarifies the power, status and permitted investments of the Small Business Investment Corporation (SBIC).  It also requires the State Investment Council to review SBIC funding once per year and adjust the funding to one-fourth percent of the market value of the Severance Tax Permanent Fund if the funding is below this level.  Finally, it requires the State Investment Council to report semi-annually on New Mexico private equity investments in the Severance Tax Permanent Fund to the legislature.

 

ADMINISTRATIVE IMPLICATIONS

 

The State Investment Council expects a minor impact in reporting requirements.

 

KBC/prr ;yr/njw