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

 

 

 

SPONSOR:

Lujan

 

DATE TYPED:

2/25/03

 

HB

980

 

SHORT TITLE:

Tobacco Settlement Fund Distribution Changes

 

SB

 

 

 

ANALYST:

Smith

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

 

21,450.0

 

Recurring

 

Tobacco Settlement Program Fund

 

(21,450.0)

 

Recurring

 

Tobacco Settlement Permanent Fund

 

 

 

 

 

(Parenthesis ( ) Indicate Revenue Decreases)

 

Conflicts with SB298 and HB244

 

SOURCES OF INFORMATION

 

Responses Received From

 

DFA

 

SUMMARY

 

     Synopsis of Bill

 

House Bill 980 would change the amount of funds transferred from the tobacco settlement permanent fund to the tobacco settlement program fund to 100% percent of the amount received each year.  Current law provides that 50% of the amount received each year is transferred from the permanent fund to the program fund and thereby made available for appropriation. 

 

HB980 also specifies that the tobacco settlement permanent fund is a reserve fund and may be expended like other general fund reserve accounts when authorized by the general appropriations act.  No other appropriations or distributions from the tobacco settlement permanent fund are permitted unless authorized by a three-fourths vote of each house.

 

FISCAL IMPLICATIONS

 

This bill does not actually appropriate the corpus of the permanent fund; it merely enables future transfers.

 

CONFLICT

 

This bill conflicts with SB298 and HB244. The Executive proposals abolish all the tobacco funds and divert the revenue to the general fund.

 

OTHER SUBSTANTIVE ISSUES

 

Permanent fund balances are invested by the State Investment Council in a diversified portfolio of stocks and bonds. Annual returns have been mostly negative since inception; cumulative losses total $5.5 million.  Policymakers should anticipate further losses in FY 2003; November fund pricing implies a loss of $5.7 million, or 9.6 percent, since the beginning of the fiscal year. 

 

SS/njw