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:

Coll

 

DATE TYPED:

03/05/03

 

HB

897

 

SHORT TITLE:

Palace Endowment Permanent Fund

 

SB

 

 

 

ANALYST:

Gonzales

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

$2,000.0

 

 

Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

 

Indeterminate

 

Recurring

New Fund

(Parenthesis ( ) Indicate Revenue Decreases)

 

SOURCES OF INFORMATION

 

LFC Files

 

Responses Received From

Office of Cultural Affairs (OCA)

Department of Finance Administration

State Investment Council

 

SUMMARY

 

     Synopsis of Bill

 

House Bill 897 appropriates $2 million from the general fund to the Department of Finance and Administration for the purpose of matching grants and contributions from private sources made to the Palace Endowment Fund, created by this bill, to use for designing, acquiring, developing, constructing, buying or leasing materials for educational activities and museum exhibitions of the Palace of the Governors.  The appropriation is for fiscal years 2004 through 2006.  Distributions shall only to be made from the fund each fiscal year for up to five percent of the market value of the fund at the end of the previous calendar year, although no distribution can be made if the market value of the fund at the end of the previous calendar year is less than $4 million.

     Significant Issues

 

  • Legislative appropriations can only be made to the fund if it is matched equally from private sources.
  • Money in the funds shall be invested by the State Investment Officer as land grant permanent funds are invested.  Income from the investment will be credited to the fund.
  • When distributions are made from the fund, they are appropriated to the Board of Regents of the Museum of New Mexico for the purposes stated above.
  • In order to receive the full $2 million, matching funds of $2 million must be matched by 2006 or the balance from the original $2 million appropriation reverts to the general fund.
  • Money in the fund will not revert or be transferred to any other fund.

 

The Museum of New Mexico Foundation is the fund-raising organization for the Museum of New Mexico facilities, including the Palace of the Governors.  According to OCA, the Foundation has expressed commitment to raising the matching funds required in this legislation.

 

FISCAL IMPLICATIONS

 

The appropriation of $2 million contained in this bill is a non-recurring expense to the general fund.  Any unexpended or unencumbered balance remaining at the end of FY06 shall revert to the general fund.

 

It is expected the investment made for the Palace of the Governors will generate additional admission revenue for museum operations.

 

ADMINISTATIVE IMLICATIONS

 

There would be minimal staff time to administer the fund for the State Investment Council, Department of Finance and Administration and the Office of Cultural Affairs.

 

OTHER SUBSTANTIVE ISSUES

 

As noted by OCA, establishing this endowment will improve the ability of the Palace of the Governors to plan programs that will benefit the public. This would increase attendance and admissions revenues. This is especially crucial as the OCA and the museum begin construction on the new history museum, as part of the Palace complex in downtown Santa Fe.   Private donors look to the financial health and sustainability of the organizations they support.  This proposed Palace Endowment could strengthen the attractiveness of the Palace of Governors History Museum as worthy of donor support.

 

POSSIBLE QUESTIONS

 

·        The Office of Cultural Affairs administers all funds for its divisions, including those for the Museum of New Mexico and its Palace of Governors.  Should the distribution be made to the Museum of New Mexico Board of Regents as opposed to the Office of Cultural Affairs?

JMG/njw