Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are available on the NM Legislative Website (legis.state.nm.us). Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and attachments may also be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR	Begaye		DATE TYPED	2/4/04		HB	42
SHORT TITLE		Impact Aid Revenue as Federal Revenue				SB
					ANALYST		Segura

APPROPRIATION

Appropriation Contained		Estimated Additional Impact		Recurring or Non-Rec	Fund Affected
FY04	FY05	FY04	FY05
			$50,362.5	Recurring	GF

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue		Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
FY04	FY05
		($50,362.5)	Recurring	Impact-Aid

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Public Education Department (PED)

SUMMARY

Synopsis of Bill

House Bill 42 would amend the Public School Finance Act to reduce the percentage of Impact Aid revenue for purposes of the State Equalization Guarantee (SEG) from 75 percent to 50 percent.

Significant Issues

According to statutory provisions, New Mexico qualifies under the federal Impact Aid requirements as an equalized state and has been allowed to consider eligible Impact Aid receipts in determining the amount of state aid to public school districts.

The department indicates that if House Bill 42 were enacted, substantial disequalization within the state would occur with regard to funds available to school districts for operational expenditures. The resulting disparity would disqualify the State of New Mexico from meeting federal criteria that allows the state to qualify as an equalized state, thereby removing the state’s ability to take credit for any impact aid receipts.

FISCAL IMPLICATIONS

House Bill 42 would have a substantial fiscal impact and require the Legislature to appropriate a projected $50.0 million in general fund revenue to replace the loss of Impact Aid credits in-order to maintain current unit value. Otherwise, the unit value for all school districts would have to be reduced proportionally to make up for the loss to the SEG.

OTHER SUBSTANTIVE ISSUES

According to PED, if New Mexico were not allowed to take credit for Impact Aid receipts, the state equalization guarantee would be reduced by an estimated $50.0 million currently being applied as a credit. Impact Aid districts would have over $88.0 million that would not be considered in the SEG formula calculation.

RS/yr