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F I S C A L I M P A C T R E P O R T
SPONSOR Foley
DATE TYPED 02/07/05 HB 117/aHCPAC
SHORT TITLE Retiree Health Care Authority Expenses
SB
ANALYST Geisler
APPROPRIATION
Appropriation Contained Estimated Additional Impact Recurring
or Non-Rec
Fund
Affected
FY05
FY06
FY05
FY06
$950.0
Non-Recurring Retiree Health
Care Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates: Senate Bill 322
Relates to: Senate Bill 224
SOURCES OF INFORMATION
Department of Finance and Administration (DFA)
New Mexico Retiree Health Care Authority (RHCA)
SUMMARY
Synopsis of HCPAC Amendments
The House Consumer and Public Affairs Committee amendments to House Bill 117 increased
the appropriation from $615.5 thousand to $950 thousand and changed the funding source from
the general fund to the retiree health care fund. The establishment of a satellite office in Santa Fe
is also authorized by amendment. As amended, HB 117 now duplicates SB 322.
In should be noted that in regards to the satellite office, DFA has stated that it is not clear why a
satellite office in Santa Fe is necessary now that the agency has consolidated its operations in a
single office in Albuquerque.
Synopsis of Original Bill
HB 117 would appropriate $615.5 thousand to the Retiree Health Care Authority (RHCA) for
operational expenses in FY05. Unexpended or unencumbered amounts would revert to the Gen-
eral Fund at the end of FY05. The bill contains an emergency clause which would make the bill
effective upon enactment
pg_0002
House Bill 117/aHCPAC -- Page 2
Significant Issues
RHCA believes a supplemental appropriation is essential to continue FY05 operations. The
Department of Finance and Administration (DFA) counters that supplemental funding is not re-
quired since RHCA can request an increase in operating budget funds thru the budget adjustment
review (BAR) process.
RHCA provides: the Governor line-item vetoed $1,231.0 of the RHCA’s operating funds for
FY05 and proposed to partially re-appropriate the funds to the vetoed categories via BARs from
the Benefits Division of the agency’s budget, for selected activities only. The RHCA and other
interested parties filed a lawsuit claiming that this funding mechanism would unconstitutionally
usurp the Legislature’s sole authority to make appropriations; that suit is pending. An immediate
supplemental appropriation for FY05 is critical to maintain program operations. This approach
would address the immediate crisis without compromising either the Governor’s or the RHCA’s
position.
DFA notes that the agency already has statutory authority to increase its budget as necessary,
without additional legislation and without having to draw upon the General Fund. This authority
is provided in Section 11(E)(15) of the General Appropriation Act of 2004, which states "the re-
tiree health care authority may request budget increases from internal service funds/interagency
transfers and other state funds."
If the agency requires more funds to support its administrative costs, it can submit a budget ad-
justment request to DFA and draw upon the retiree health care fund to increase its program sup-
port budget.
FISCAL IMPLICATIONS
RHCA provides: to continue operations, the RHCA transferred funding via BARs from the in-
tact personal services category to the other category. However, without availing itself of a fund-
ing mechanism that it believes to be illegal and with inadequate funds remaining in Personal
Services, the RHCA will exhaust available funds by March 2005.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
SB 224 duplicates this bill. SB 322 provides RHCA with an appropriation of $950 thousand for
FY05.
OTHER SUBSTANTIVE ISSUES
RHCA notes that the proposed appropriation of $615.5 is inadequate and proposes an amend-
ment below. Both DFA and RHCA believe that a general fund appropriation in not necessary—
there are sufficient funds in the retiree health care fund.
ALTERNATIVES
According to DFA, this bill is not necessary--the agency can request any necessary increases to
its FY05 budget under existing statutory authority, subject to State Budget Division approval.
RHCA believes this would be unconstitutional.
pg_0003
House Bill 117/aHCPAC -- Page 3
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.
RHCA states that their program operations for the remainder of FY05 will be jeopardized.
AMENDMENTS
RHCA suggests:
1) Change the appropriation from $615.5 to $950.0.
2) Change the funding source from the general fund to the retiree health care fund.
GG/lg/njw