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SPONSOR: |
Robinson |
DATE TYPED: |
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HB |
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SHORT TITLE: |
Investment of Severance Tax Permanent Fund |
SB |
661 |
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ANALYST: |
Neel |
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REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
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See
Narrative |
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(Parenthesis ( ) Indicate Revenue Decreases)
LFC files
Responses
Received From
State
Investment Council (SIC)
SUMMARY
Synopsis
of Bill
Senate Bill 661 adds a
new section of statute to those governing available investment vehicles for the
Severance Tax Permanent Fund to allow direct investment in
SB 661 defines the
“New Mexico Fine Art Private Equity Fund” and the “New Mexico Fine Musical Instrument
Fund” as a limited liability company,
limited partnership or corporation that acquire fine art or musical instruments
that have a value of between $150.0 and $8,000.0. Further requirements are made as the origin
of the musical instruments.
The bill contains and
emergency clause.
Significant
Issues
The FY02 returns for the Land Grant Permanent Fund (LGPF)
and Severance Tax Fund (STPF) were –7.9 percent and –8.7 percent,
respectively. The LGPF outpaced its
policy target by 20 basis points while the STPF under performed its policy
target by 60 basis points.
OTHER SUBSTANTIVE
ISSUES
A portion of STPF
is allocated to economically targeted investments. For example, STPF may purchase certificates
of deposit in
Implicit in these
statutes is the notion of some sort of subsidy; without legislative
imperatives, investments would be made in some other (presumably more
profitable) asset class. At this point,
the opportunity cost of these investments is unknown. In addition, the benefits that these
subsidies generate from increased economic activity is also unmeasured.
SS/sb/njw