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

SPONSOR SCONC

DATE TYPED 3/10/05 HB

SHORT TITLE Water Trust Board Changes

SB 132/239/SCONCS/SFL#1

ANALYST Aguilar

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

$4,375.0 Recurring Water Project

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Conflicts with HB 587

Relates to SB139, HB403, SB 186 & HB 271

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of the State Engineer (OSE)

New Mexico Finance Authority (NMFA)

Energy, Minerals and Natural Resources Department (EMNRD)

SUMMARY

Synopsis of Senate Floor Amendment #1

Senate Floor Amendment #1 to Senate Conservation Committee substitute for Senate Bills 132

and 239 provides that at least t

wenty-five percent of all water project funds shall be dedicated to forest

and watershed restoration projects.

Synopsis of Senate Conservation Committee Substitute

The Senate Conservation Committee substitute for Senate Bill 132 and 239 makes technical cor-

rections to the language which designates the members and designees of the Water Trust Board

(WTB).

SB 132/239 SCONCS provides for the addition of the executive director of the New Mexico as-

Senate Bill 132 & 239/SCONCS/SFL#1 -- Page 2

sociation of conservation districts or the executive director’s designee and removes one public

member.

SB 132/239 SCONCS amends existing statute to provide that twenty-five percent of all water

project funds be dedicated to forest and watershed restoration projects.

The bill changes one of the five project types that may be authorized from water conservation

projects to conservation, recycling treatment or re-use of water projects.

The bill gives priority to projects that have been identified as being urgent to regional water

plans (either completed or under development) and that have obtained requisite state and federal

SB 132/239 SCONCS removes the drought strike team from water trust board duties and allows

for donations to be made to the water project fund.

Significant Issues

The current Water Project Finance Act defines the following five categories or types of projects

as being eligible for funding:

1.

the storage, conveyance or delivery of water to end-users;

2.

the implementation of Federal Endangered Species Act collaborative programs;

3.

the restoration and management of watersheds;

4.

flood control; and

5.

water conservation.

The committee substitute significantly changes what projects under the Act are given priority.

Specifically, projects may be given priority even though they are not related to a completed re-

gional water plan that has been accepted by the interstate stream commission.

Annually, the WTB solicits applications for projects. The WTB screens the applications to en-

sure that the proposed projects satisfy the requirements to fit into one of five categories. The

WTB then reviews and prioritizes the projects and submits funding recommendations to the Leg-

islature which authorizes the final list of projects for funding.

The NMFA notes there are many factors and circumstances which affect the urgency, priority

and effectiveness of water projects including: drought-related issues; changing atmospheric fac-

tors; drinking water problems for local communities (contamination, dwindling water basins,

costs of drilling deeper wells, etc.); water requirements for economic development projects and

new businesses; population growth; etc. Creating a statutory setaside of 25 percent for “forest

and watershed restoration projects” would reduce the flexibility of the WTB and the Legislature

in responding to changes in these factors and to new information and data that becomes avail-

able.

The addition of the executive director of the New Mexico association of conservation districts or

the executive director’s designee may be viewed as providing additional representation to an en-

tity already represented on the board. The association of conservation districts is currently repre-

sented by the New Mexico Department of Agriculture (NMDA). Further, the removal of a pub-

lic member may be viewed as limiting the role of the public in the process.

Senate Bill 132 & 239/SCONCS/SFL#1 -- Page 3

Creation of the Drought Task Force by Executive Order has eliminated the need for the Water

Trust Board (WTB) to create a separate strike team.

PERFORMANCE IMPLICATIONS

At present, the water trust board does not have developed performance measures in place to de-

termine the effectiveness of expenditures or projects funded. The LFC noted this as a concern

during hearings in the interim.

FISCAL IMPLICATIONS

No significant impact on the aggregate funding available for water projects. However, there

could be a significant impact on how the aggregate funding would be allocated by category or

type of project each year.

This bill directs the WTB to allocate 25 percent of the available revenue to forest and watershed

restoration projects. Earmarking reduces the ability of the legislature to establish spending priori-

ties.

TECHNICAL ISSUES

The committee substitute dedicates a significant portion of funds available to the water trust

board for forest and watershed restoration projects. This appears to conflict with Section 72-4A-

5 NMSA 1978 which only provides authorization for projects for the restoration and manage-

ment of watersheds.

PA/lg