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

SPONSOR Fidel

DATE TYPED 3/2/05

HB

SHORT TITLE NMFA Communication Equipment Bonds

SB 975

ANALYST Kehoe

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

NFI

(See Fiscal Im-

pact Narrative)

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

$160.0

$650.0 Recurring Surcharge Fee Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Insurance Division of Public Regulation Commission

New Mexico Finance Authority (NMFA)

SUMMARY

Synopsis of Bill

Senate Bill 975 authorizes the New Mexico Finance Authority (NMFA) to issue bonds for the

purpose of financing information and communication equipment and extends a surcharge on cer-

tain fees for repayment of the bonds.

Significant Issues

The 1996 Legislature authorized NMFA to issue up to $1 million in revenue bonds for the pur-

pose of acquiring information and communication equipment for the Insurance Department of

Senate Bill 975 -- Page 2

the then State Corporation Commission. A surcharge was imposed on certain fees collected by

the Superintendent of Insurance and pledged and distributed to NMFA for repayment of the

bonds. The $3.00 surcharge was imposed commencing on March 1, 1996 and ending March 1,

2006, on certain documents for the following: 1) agents’ licenses and appointments; 2) solicitor

licenses; 3) rating organization or rating advisory organization licenses; 4) motor clubs; 5) all

businesses except property or casualty businesses required to file forms or rates; and 6) health

maintenance organizations.

Senate Bill 975 authorizes NMFA to issue and sell bonds in the amount of $2 million for the pur-

pose of financing information and communication equipment, including computer hardware and

software, for the Insurance Division of the Public Regulation Commission. The bill also extends

the $3.00 surcharge on appointment fees through June 30, 2009 as a revenue stream for re-

payment of the bonds. The bill proposes the surcharge for the following: 1) agents’ licenses and

appointments; 2) solicitor licenses; 3) non-profit health care plans; 4) bail bondsmen; 5) health

maintenance organizations; and 6) purchasing groups and foreign risk retention groups.

FISCAL IMPLICATIONS

According to the Insurance Division of the Public Regulation Commission (PRC), the proposed

surcharge would generate approximately $160 thousand in April through June 2006, and ap-

proximately $650 thousand annually through June 30, 2009. The surcharge will be collected by

the Superintendent of Insurance and distributed monthly to NMFA to be pledged irrevocably for

the payment of principal, interest and any other expenses or obligations related to the issuance of

bonds by NMFA.

ADMINISTRATIVE IMPLICATIONS

According to PRC, the upgrade and development of the Insurance Division’s information sys-

tems is necessary to meet demands for nationally coordinated and efficient regulatory processes.

Planned purchases and upgrades will enable such advances as the ability to receive and process

tens of thousands of licensing transactions electronically each year.

LMK/yr