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:

Ponce

 

DATE TYPED:

 2/28/03

 

HB

93/aHGUAC

 

SHORT TITLE:

Local Government Investment Criteria

 

SB

 

 

 

ANALYST:

Gilbert

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

 

$0.1 See Narrative

Recurring

County Funds

 

$0.1 See Narrative

Recurring

Municipal Funds

(Parenthesis ( ) Indicate Revenue Decreases)

 

Duplicates SB 40

 

SOURCES OF INFORMATION

 

LFC Files

 

SUMMARY

 

     Synopsis of HGUAC Amendment

 

The House Government and Urban Affairs Committee amendment to House Bill 93 makes the following changes:

 

Removed from HB 93, on page 3, line 1 through 3, is language allowing local governments to invest county or municipal permanent funds, equaling $15 million or more, in the same manner as funds of the state treasurer are invested.

 

HB 93/aHGUAC also changes the investment authority for local government permanent funds as follows:

 

(1) if the fund is less than five ten million dollars ($5,000,000), ($10,000,000) it shall be invested as other funds of the local government; and

 

(2) if the fund is five ten million dollars ($5,000,000) ($10,000,000) or over to fifteen million dollars ($15,000,000), it may be invested as funds of class A counties are invested. and

 

     Synopsis of Original Bill

 

House Bill 93 amends NMSA 1978, § 6-6-19, which relates to creation and investment of local government permanent funds.

 

     Significant Issues

 

This bill adds investment authority language to NMSA 1978, § 6-6-19 (D), specifying how local government permanent funds may be invested:

 

  • If the fund is less than $5 million, it shall be invested as other funds of the local government;
  • If the fund is $5 million to $15 million, it may be invested as funds of Class A Counties are invested; and
  • If the fund is $15 million or more, it may be invested as funds of the state treasurer are invested.

 

According to the Department of Finance and Administration (DFA), the intent of this bill is to better safeguard local government permanent funds.

 

FISCAL IMPLICATIONS

 

Limitation of investment options may impact overall investment returns for local government permanent funds.

 

RLG/sb/njw