Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR Campos

ORIGINAL DATE

LAST UPDATED

1/25/06

1/31/06 HB 110a/HBIC

SHORT TITLE Grants to Rural Communities

SB

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$500.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to:

HB 146, SB 98, SB99

SOURCES OF INFORMATION

LFC Files

Responses Received From

Economic Development Department (EDD)

Department of Agriculture (NMDA)

Department of Finance and Administration (DFA), Local Government Division (LGD)

SUMMARY

Synopsis of HBIC Amendment

The House Business and Industry Committee amendment changes the recipient of the appropria-

tion from the Department of Finance and Administration to the Economic Development Depart-

ment for the same purpose.

Synopsis of Original Bill

House Bill 110, “An Act Making an Appropriation to Assist Rural Communities in Creating

Economic Development Projects,” appropriates $500 thousand ($500,000) from the general fund

to the Department of Finance and Administration, Local Government Division, for the New

Mexico Rural Development Response Council to make grants to rural communities and match

federal funding and foundation grants.

House Bill 110/aHBIC – Page

2

FISCAL IMPLICATIONS

The appropriation of $500 thousand ($500,000) contained in this bill is a recurring expense to the

general fund. Any unexpended or unencumbered balance remaining at the end of shall revert to

the general fund.

SIGNIFICANT ISSUES

The appropriation would support the New Mexico Rural Development Response Council’s rural

readiness program.

Since their inception, rural response councils across the nation have been funded by the federal

government. EDD indicates that federal funding for Rural Development Response Councils has

declined in recent years due to federal cut backs. All federal funding will end this year.

According to the NM Department of Agriculture, the Rural Readiness program has been a highly

successful activity of the New Mexico Rural Development Response Council. This program is

viewed as a national example for rural development efforts and works with communities in New

Mexico with a population fewer than 15,000 residents to provide technical assistance to imple-

ment economic development projects. It is a self-help economic development program for these

communities, which often lack the personnel or expertise to implement economic development

activities. NMDA has been a member of the New Mexico Rural Development Response Council

for many years.

PERFORMANCE IMPLICATIONS

DFA would not have oversight or responsibility for the performance of the funded programs.

According to DFA, the local government division (LGD) does not administer a program directly

related to providing grants for matching funds for economic development programs and is unre-

lated to LGD/DFA programmatic goals. The effectiveness of this program/funding can not be

determined at this time; however, this program addresses programmatic goals at the New Mexico

Economic Development Department.

ADMINISTRATIVE IMPLICATIONS

DFA indicates that it cannot administer the appropriation as proposed and does not possess the

staff required to provide the oversight for such an activity or program. The NMEDD currently

overseas matching fund programs and activities and could provide the oversight required for a

program or activity of this nature.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

•

HB 146 would appropriate $1 million to Economic Development Department for the same

purpose.

•

SB 98 would appropriate $500 thousand to the Department of Finance and Administration

for the same purpose.

•

SB 99 would appropriate $500 thousand to the Economic Development Department for the

same purpose.

House Bill 110/aHBIC – Page

3

OTHER SUBSTANTIVE ISSUES

NMDA indicates that appropriating these funds to EDD would be a more logical fit.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

EDD indicates that there are no other statewide programs capable of filling this gap if the Rural

Development Response Council does not have funding.

According to NMDA, there will be fewer opportunities for New Mexico rural communities to

enact viable economic development projects; studies indicate that New Mexico communities

with populations under 5,000 residents continue to lose population at an alarming rate. This de-

cline in population and in maintaining a viable rural New Mexico would likely accelerate.

BE/nt:yr