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

SPONSOR Hobbs

ORIGINAL DATE

LAST UPDATED

1/23/06

HB 45

SHORT TITLE Service Members’ Life Insurance Fund

SB

ANALYST Peery

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$1,500.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

$1,500.0

Recurring

Service Mem-

bers’ Life Insur-

ance Reim-

bursement Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY06

FY07

FY08 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$369.5

$369.5 Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Military Affairs (DMA)

Department of Finance and Administration (DFA)

Attorney General’s Office (AGO)

Veterans’ Service Department (VSD)

House Bill 45 – Page

2

SUMMARY

Synopsis of Bill

House Bill 45 appropriates $1,500.0 from the general fund to Service Members’ Life Insurance

Reimbursement Fund for the purpose of paying premium reimbursements pursuant to the provi-

sions of Section 20-4-7.3 NMSA 1978. Section 20-4-7.3 NMSA 1978 pertains to service mem-

bers’ life insurance reimbursement fund created in the state treasury. The fund consists of legis-

lative appropriations to the fund, gifts, grants, donations, bequests to the fund and income from

investment of the fund. The fund is administered by the Department of Military Affairs, and

money in the fund is appropriated to the Department of Military Affairs for the purpose of reim-

bursing eligible members of the New Mexico National Guard for premiums paid for benefits un-

der the Servicemembers’ Group Life Insurance (SGLI) program.

FISCAL IMPLICATIONS

The appropriation of $1,500.0 contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of fiscal year 2007 shall revert

to the general fund.

The Department of Military Affairs reports the cost of the SGLI reimbursements for fiscal years

2005 and 2006 are $1,369,550. The department reports due to increases in premiums from

$16.50 to $26.00 a month they will be short $369,550 in FY06 in paying out reimbursement.

The Department of Military Affairs has requested a supplemental in FY06 to cover the increase

in insurance premiums. The department estimates costs for the SGLI reimbursement to be

$1,204,320 in fiscal year 2007.

SIGNIFICANT ISSUES

The proposed legislation will reimburse the monthly premium of $26.00 to cover 3,800 active

duty New Mexico National Guard members with an SGLI policy of $400,000 for fiscal year

2007. Of the active duty National Guard member, 564 are currently in combat zones.

ADMINISTRATIVE IMPLICATIONS

The Department of Military Affairs reports the reimbursement of SGLI premiums is problematic

due to the reverting of unexpended funds at the end of the fiscal year. The department states

they would not be able to reimburse premiums for the final months of fiscal year 2007 due to the

unexpended balance reverting before reimbursement data is available.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

The proposed legislation has a direct relationship with Section 20-4-7.3 NMSA 1978.

House Bill 45 – Page

3

ALTERNATIVES

The Department of Military Affairs suggests that the

Service Members’ Life Insurance Reimburse-

ment Fund be non-reverting or budgetary authority be given to the department to extend the appropriation

beyond the appropriated fiscal year in order to reimburse SGLI premiums for national guard members.

RLP/mt