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

SPONSOR Smith

DATE TYPED 02-23-05 HB

SHORT TITLE Specialty Crop Program

SB 367

ANALYST Woods

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$250.0

Recurring

General

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to the appropriation for New Mexico State University in the General Appropriations Act.

Duplicates SB196

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico State University (NMSU), New Mexico Department of Agriculture (NMDA)

New Mexico Commission on Higher Education (CHE)

SUMMARY

Synopsis of Bill

Senate Bill 367 – Making an Appropriation to New Mexico State University for the Specialty Crop

Program – appropriates $250,000 from the general fund to the Board of Regents of New Mexico

State University for the New Mexico Department of Agriculture for expenditure in FY06 to fund the

Specialty Crop Program. Any unexpended or unencumbered balance remaining at the end of FY06

shall revert to the general fund.

Significant Issues

NMDA indicates the Specialty Crops Program – defined as crops that bring a higher net return

per acre than more traditional crops such as corn, wheat, or cotton – was originally funded during

the 1983 legislative session with an initial allocation of $75,000 in recurring funds. Since its in-

Senate Bill 367 -- Page 2

ception, the program has provided funds to groups and individuals who desire to pursue specialty

agricultural products production and marketing. It has also provided start-up funds to organiza-

tions advocating programs that positively impact farmers and ranchers in the state. The Spe-

cialty Crops Program receives over $300,000 in requests each year; however, limited funding

prohibits NMDA from funding many viable projects, while under-funding many of those that

receive financial support.

CHE notes that this request was not included in the list of priority projects submitted by NMSU

to CHE for review. Accordingly, the request was not included in the commission’s funding rec-

ommendation for FY06.

FISCAL IMPLICATIONS

The appropriation of $250,000 contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of FY06 shall revert to the gen-

eral fund.

ADMINISTRATIVE IMPLICATIONS

NMDA indicates it would retain oversight of the program. Further, since the Specialty Crops

Program already exists, it would entail little additional administrative impact other than adding to

the fund of available grant resources.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Relates to the appropriation for New Mexico State University in the General Appropriations Act.

Duplicates HB196 in that HB196 also seeks to appropriate $250,000 from the general fund to the

Board of Regents of New Mexico State University for the New Mexico Department of Agricul-

ture for expenditure in FY06 to fund the Specialty Crop Program.

OTHER SUBSTANTIVE ISSUES

CHE indicates that higher education institutions receive indirect cost revenues from federal con-

tracts and grants. This money is unrestricted in the sense that the governing board of the institu-

tion has the flexibility to choose which projects are supported with these funds. A great deal of

this money is used as seed money to develop new research and public services projects at institu-

tions. A portion of the indirect cost revenue, and earned overhead, is used to support items such

as the salaries of the accountants responsible for monitoring the contract and grants, or for pay-

ing utilities and other expenses required to maintain the space where the contract and grant ac-

tivities are housed. CHE further suggests that the higher education funding formula allows insti-

tutions to retain 100 percent of this indirect cost revenue, and one of the purposes of retaining

these funds is to provide seed money and matching funds for projects such as the one proposed

in this bill.

BFW/lg