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

SPONSOR Campos, Jose A.

DATE TYPED 02-07-05 HB 323

SHORT TITLE NM Rural Development Response Council Grants

SB

ANALYST Woods

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$500.0

Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to the appropriation for the Economic Development Department in the General Appro-

priations Act.

Relates to SB95

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Economic Development Department (EDD)

New Mexico Department of Finance and Administration (DFA) (SB95)

SUMMARY

Synopsis of Bill

House Bill 323 – Making an Appropriation to the Economic Development Department for the

New Mexico Rural Development Response Council to Make Grants to Rural Communities and

Match Federal Funding and Foundation Grants – appropriates $500,000 from the general fund to

the Economic Development Department for expenditure in FY06 and subsequent fiscal years to

match federal funding and foundation grants and to make grants to rural communities statewide

through the New Mexico Rural Development Response Council program under the National Ru-

ral Development Partnership. Any unexpended or unencumbered balance remaining at the end of

a fiscal year shall not revert to the general fund.

House Bill 323 -- Page 2

Significant Issues

In 1991 a Presidential Initiative on Rural America dictated that an array of federal agencies con-

vene to discuss improving methods to better promulgate the various federal, state and local non-

profit development programs available to rural and tribal communities. The principal outcome

was the formation of the National Rural Development Partnership, a coalition of Federal agen-

cies – the departments of Labor, Transportation, Agriculture, Veterans Administration, and

Health and Human Services – which began to fund a series of new statewide organizations

known as State Rural Development Councils.

DFA indicates that the New Mexico Rural Development Response Council (NMRDRC) is a

501c non-profit corporation that began operations in 1992, and serves communities, villages, cit-

ies, counties, tribal areas and other organized entities. Its principal mission is to:

•

build networks;

•

bring together people and organizations to solve local issues;

•

remove barriers; and

•

create opportunities.

DFA further notes that NMRDRC has implemented a program termed Rural Readiness that as-

sists communities in building an economic development project and doing so from concept

through implementation. This assistance includes the following:

•

community visits and assessments through analysis to identify industries that have likeli-

hood of success in that community;

•

community development profile through data collection on ten economic variable indica-

tors; and

•

technical assistance in reviewing funding applications for communities, identifying fund-

ing sources and other areas.

NMRDRC receives matching funds from federal and other grantor agencies, and DFA indicates

that, in FY03, some $1million was received in various federal and foundation grants, with each

of the communities receiving up to $50,000.

FISCAL IMPLICATIONS

The appropriation of $500,000 contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of FY06 shall not revert to the

general fund.

ADMINISTRATIVE IMPLICATIONS

DFA notes that NMRDRC is a non-profit organization that cannot receive appropriations directly

from the state. Further, that attention should be given to the manner with which matching funds

utilized from federal and foundation funds that are associated to state funds.

EDD suggests that it is the appropriate agency to administer dollars for rural economic develop-

ment projects as the department has knowledge of economic development work statewide and

House Bill 323 -- Page 3

can appropriately deploy dollars to avoid duplication of services. Further, EDD indicates that

there are state, federal and other non-profit organizations working on economic development in

New Mexico’s rural communities and these dollars should be coordinated to ensure that all re-

gions of that state are served equitably with state money and that services are not being dupli-

cated.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Relates to the appropriation for the Economic Development Department in the General Appro-

priations Act.

Relates to SB95 in that SB95 also seeks to appropriate $500,000 from the general fund; however

– as opposed to the Economic Development Department – SB95 appropriates the funds to the

Local Government Division of the Department of Finance and Administration for expenditure in

fiscal year 2006 to match federal funds and foundation grants and to make grants to rural com-

munities through the New Mexico Rural Development Response Council program under the Na-

tional Rural Development Partnership. Like this bill, SB95 states that that any unexpended or

unencumbered balance remaining at the end of a fiscal year shall not revert to the general fund.

OTHER SUBSTANTIVE ISSUES

DFA indicates that the Rural Readiness Program (Third Quarter Report) identifies seventeen

communities for the period of July-September 2004 showing the communities have undertaken

an economic development project describing a positive impact on the local economy either di-

rectly producing jobs or by improving the capacity of the community to compete effectively for

economic development activity. The communities include Raton, Taos, Truth or Consequences,

Fort Sumner, Anthony, Gallup, Santa Clara, Belen, Artesia, Las Vegas, Santa Rosa and Cuba;

while the counties are indicated to be Harding, Union, McKinley, Mora and Hidalgo.

BFW/njw