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

SPONSOR Nuñez

ORIGINAL DATE

LAST UPDATED

1/25/06

HB 136

SHORT TITLE State Engineer Water Masters

SB

ANALYST Lewis

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

1,000.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of the State Engineer (OSE)

Department of Finance and Administration (DFA)

SUMMARY

FOR THE WATER AND NATURAL RESOURCES COMMITTEE

Synopsis of Bill

House Bill 136 appropriates $1,000,000 from the general fund to the Office of the State Engineer

to pay the costs of employing water masters for the administration of the Active Water Manage-

ment Program.

FISCAL IMPLICATIONS

The appropriation of $1,000,000 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.

However, the Office of the State Engineer (OSE) argues that unexpended and unencumbered

funds remaining at the end of FY 2007 should not revert to the general fund, but should be avail-

able to the state engineer for expenditure in subsequent fiscal years to pay the costs of employing

water masters in term positions for two-year periods to facilitate the implementation of Active

Water Resource Management (AWRM) throughout New Mexico, until the positions are either

House Bill 136 – Page

2

made permanent or funded pursuant to the provisions of NMSA 1978, § 72-3-4.

SIGNIFICANT ISSUES

According to the OSE, the funding of water masters within AWRM will support the Governor’s

priority policy initiative as identified in the latest Moving New Mexico Forward update of Pro-

tecting Our Water and the Environment by strengthening the state’s long-term water resource

planning capabilities and by conserving ground water resources.

OSE notes that recent droughts, increasing population, compact requirements with other states

and litigation involving water have created a strain on New Mexico’s water resources. Water

administration is required to maintain proper distribution of water to senior water rights owners,

cities, towns, villages, industrial uses, agricultural and all water users within the state.

According to the OSE, the drought that New Mexico has been experiencing over the past several

years is likely to continue, increasing the need for water master oversight of the distribution and

use of precious water resources. New Mexico is obligated to meet its compact deliveries on sev-

eral river systems throughout the state. The cost to the state of not meeting these obligations

would be enormous. In some instances, New Mexico could even lose control of its water to the

federal government through Supreme Court action.

According to the Department of Finance and Administration (DFA) the OSE is in the process of

implementing AWRM in seven priority basins where the potential for water shortage is particu-

larly acute. AWRM involves metering and enforcing water use. In order to administer the initia-

tive, the OSE will need to deploy water masters in each basin to monitor water use and manage

available water resources, to enforce water rights and to insure that interstate delivery require-

ments are met.

DFA notes that the timing of the appropriation is appropriate, because the agency anticipates

having a number of water meters and the other resources necessary to implement AWRM in

place in the priority basins by FY07, at which point staffing the water positions would be the fi-

nal step. Based upon rough agency calculations of $90,000 per water master, this appropriation

could fund up to ten positions, including overhead costs.

PERFORMANCE IMPLICATIONS

OSE notes that the appropriation proposed in this bill will fund the costs of providing water mas-

ters required under the AWRM Program for a one-year period. This will allow hiring of water

masters and beginning the training process.

According to DFA, OSE performance is monitored by General Appropriation Act performance

measures pertaining to the readiness to implement AWRM in three of seven identified priority

basins. Assuming that this appropriation is used to fund water master positions in the three basins

covered by the measures, the agency’s performance measurement would improve.

TECHNICAL ISSUES

According to the DFA, under modified accrual accounting (Section 6-5-10(A) NMSA 1978), the

reversion language should read “Any unreserved undesignated balance remaining at the end of

House Bill 136 – Page

3

fiscal year 2007 shall revert to the general fund.”

ALTERNATIVES

DFA notes that the counties could be billed to pay for all or part of the positions. However, there

has been resistance to this approach; and a number of counties do not have the financial ability to

fund these positions.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

According to DFA, OSE would have to either

assess the counties for the cost of water master positions to move forward with AWRM,

which it has the authority to do; or

(less likely) delay the implementation of AWRM.

However, OSE argues that it is essential that the State Engineer be able to hire water masters

when the need arises and for those areas deemed most critical without having to be dependent

upon affected counties to come up with the funding. Obtaining funding from counties – through

assessments for water rights – could take a year or more.

AMENDMENTS

OSE suggests:

1)

After 2007 in line 19, insert “and subsequent fiscal years”.

2)

After the word masters in line 19, insert “in term positions for two (2) year periods to facili-

tate the implementation of Active Water Resource Management throughout New Mexico,

until the positions are either made permanent or funded pursuant to the provisions of NMSA

1978, § 72-3-4”. Strike out the remainder of the original text to the end of the document.

As amended, the bill would read:

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. APPROPRIATION.--One million dollars ($1,000,000) is appropriated from the

general fund to the office of the state engineer for expenditure in fiscal year 2007 and subsequent

fiscal years to pay the costs of employing water masters in term positions for two (2) year peri-

ods to facilitate the implementation of Active Water Resource Management throughout New

Mexico, until the positions are either made permanent or funded pursuant to the provisions of

NMSA 1978, § 72-3-4

ML/nt