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

SPONSOR Campos

ORIGINAL DATE

LAST UPDATED

1-31-06

2-8-06 HB 443/aHENRC/aHAFC

SHORT TITLE Natural Resource Recovery Task Force Transfer

SB

ANALYST Woods

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico State University, College of Agriculture and Home Economics (NMSU)

New Mexico Department of Agriculture (NMDA)

SUMMARY

Synopsis of HAFC Amendment

House Appropriations and Finance Committee Amendment to HB

443/aHENRC amends the legisla-

tion as follows:

1. On page 1, line 14, strike "; MAKING APPROPRIATIONS".

2. On pages 4 and 5, strike Section 3 in its entirety.

House Appropriations and Finance Committee Amendment to HB

443/aHENRC removes the ap-

propriation from the legislation.

Synopsis of HENRC Amendment

House Energy and Natural Resources Committee amendment to HB442 amends the legislation

as follows:

1. On page 1, line 13, strike "TERMINATION" and insert in lieu thereof "LIFE".

House Bill 443/aHENRC/aHAFC – Page

2

2. On page 4, line 7, strike "2008" and insert in lieu thereof "2009".

3. On page 4, line 9, strike "2009" and insert in lieu thereof "2010".

4. On page 4, line 10, strike "2009" and insert in lieu thereof "2010".

5. On page 4, strike lines 21 through 25 and on page 5, strike page 5, lines 1 through 11

and insert in lieu thereof:

"fund a social and economic study that is consistent with the duties of the natural

resource revenue recovery task force pursuant to Section 19-1A-2 NMSA 1978.

The cooperative extension service in the college of agriculture and home econom-

ics shall administer the study and provide the study to the task force for presenta-

tion to the New Mexico legislative council and the governor.".,

House Energy and Natural Resources Committee amendment to HB442 attaches no additional

appropriation to the legislation.

Original Synopsis of Bill

House Bill 443 relates to natural resources; transferring the Natural Resource Revenue Recovery

Task Force to the New Mexico Department of Agriculture; extending the termination of the task

force; making an appropriation. Specifically, the legislation seeks to amend Section 19-1A-2

NMSA 1978 (being Laws 2003, Chapter 42, Section 2) to transfer the “Natural Resource Reve-

nue Recovery Task Force” and staffing requirements from the State Land Office to the New

Mexico Department of Agriculture (NMDA). The task force will be terminated on July 1, 2008,

pursuant to the Sunset Act. The legislation also appropriates $200,000 from the general fund to

the Board of Regents of New Mexico State University (NMSU) for NMDA to fund the opera-

tions of the Natural Resource Revenue Recovery Task force. Task force responsibilities are to

include:

•

review and analyze the historical and current differences between the prices re-

ceived by agricultural producers and the prices paid by consumers;

•

gather and compile information on the impact of the federal laws that affect agri-

culture and extraction industries, specifically the Agriculture Adjustment Act and

the National Industrial Recovery Act as originally enacted;

•

evaluate the United States congress's original objectives to stabilize commodity

prices and rural income, manage public lands for multiple use, preserve grazing

and water rights and foster timber harvests compared to the laws' outcomes;

•

assess the relationship of these laws with the Treaty of Guadalupe Hidalgo,

Kearny's Code and the preservation of New Mexico's private property rights con-

tained in the United States constitution;

•

define the economic impact of the Agriculture Adjustment Act and the National

Industrial Recovery Act upon agricultural producers, natural resource industries

and related businesses and the impact on county and state revenues;

House Bill 443/aHENRC/aHAFC – Page

3

•

develop state policies to counteract the negative effect of federal law; and

•

report its findings and recommendations annually by December 1 to the New

Mexico legislative council and the governor.

Additionally, the legislation also seeks to appropriate $500,000 to the Board of Regents of

NMSU for the Cooperative Extension Service in the College of Agriculture and Home Econom-

ics to establish an Economic, Trade and Policy Analysis Center which shall analyze, assess,

monitor and provide projections of the economic and social impacts of:

•

proposed, impending and ongoing impacts of United States agricultural policies

on New Mexico producers;

•

national trade policy on the southwest region;

•

national security events, border security policies and programs that may affect

the flow of trade across the southern border of the United States; and

•

state legislation, policies and regulations on New Mexico's producers and agri-

cultural and natural resources.

Any unexpended or unencumbered balance from either appropriation remaining at the end of fis-

cal year 2008 shall revert to the general fund.

SIGNIFICANT ISSUES

With respect to the transfer of the Natural Resource Revenue Recovery Task Force to the New

Mexico Department of Agriculture, NMDA notes the following:

•

While NMDA assumes responsibility for the task force from the State Land Of-

fice, the Commissioner of Public Lands is still charged with appointment of two

members of the task force.

•

NMDA would need at least one additional full time employee to staff the task

force and assist with analysis and generation of the report to the New Mexico

Legislative Council and the Governor.

•

It is currently unclear if one year in addition to the “wind up period” as provided in the

Sunset Act will be a sufficient amount of time to complete the tasks assigned to NMDA

and the Natural Resource Revenue Recovery Task Force.

With respect to the establishment of an Economic, Trade and Policy Analysis Center at New

Mexico State University, College of Agriculture and Home Economics, NMSU notes that under

the program, NMSU will organize and maintain interdisciplinary multi-institutional teams of ap-

plied researchers, extension development agents and public and private sector partners to:

•

Develop the necessary databases and analytical models to enable the state’s pub-

lic officials to respond to emerging rural and agricultural policies and trade issues

House Bill 443/aHENRC/aHAFC – Page

4

of interest to New Mexico, and to provide the state’s response and voice in fed-

eral legislation and regulation.

•

Analyze the impact of existing agricultural and resource policies on New Mex-

ico’s agriculture and economy.

•

The Center in cooperation with NMSU’s Range Improvement Task Force (RITF)

will evaluate, monitor, and analyze existing and alternative land and resource

policies and regulations which impact rural stability and rural economies in New

Mexico. The Center will provide the NRRRTF, Legislature, and public officials

with information to develop mitigating measures to improve or enhance rural

economies.

•

Monitor and assess trade policies of the U.S. and its trading partners that influ-

ence the state’s agriculture and natural resources, and the state and regional

economy

•

Provide disaggregated impact estimates by state, congressional district, economic

regions, industry (such as agriculture, tourism) and sub-industry (such as dairy,

cotton).

•

Evaluate policy options to address any negative impacts of trade initiatives, and

to develop proposals for state action to minimize federal policies that are harmful

to the state’s agriculture and general economy.

•

Analyze the state’s competitive position versus neighboring states in attracting

value-added industry.

NMSU adds that the information compiled by NMSU will assist in developing legislative rec-

ommendations by the Natural Resource Revenue Recovery Task Force or other legislative com-

mittees to improve the revenue situation for agricultural, natural resource and rural communities.

OTHER SUBSTANTIVE ISSUES

As background, NMSU indicates that the State of New Mexico declared an agricultural and natu-

ral resource revenue emergency in 2000 and formed the Natural Resource Revenue Recovery

Task Force (NRRRTF) to determine causes and remedies for the emergency. Other states of

emergency have been declared for border counties in regard to homeland security and the eco-

nomic crisis that has left our rural areas with limited job opportunities and a high proportion of

the population living below the Federal poverty level. Several causes for these problems have

been suggested such as unfavorable Federal economic, natural resource, and trade policies which

have had a detrimental effect on the state’s agriculture and natural resource activities. Presenta-

tions before legislative committees, and the NRRRTF identified that New Mexico processes or

adds value to its agricultural and rural resource products at a rate far lower than the U.S. average.

New Mexico finds itself in a unique location in the U.S. due to its proximity to the Mexican bor-

der. With its low level of personal income in aggregate and per capita terms, New Mexico is es-

pecially sensitive to fluctuations in U.S. economic, agricultural, and trade policies. One would

expect, therefore, that trade flow with Mexico and other countries would have an important im-

House Bill 443/aHENRC/aHAFC – Page

5

pact on the New Mexican economy as well as those of neighboring states. Competition from

Mexican imports, with NAFTA fully implemented, is expected to affect the agricultural and

other primary economic sectors in the state and the Southwest. Mexico enjoys a comparative ad-

vantage in the production of low-cost labor-intensive agricultural and manufacturing products.

This advantage may exacerbate New Mexico’s agricultural and natural resource revenue emer-

gency. As new economic and agricultural policies and trade agreements are considered such as

the Central America Free Trade Agreement (CAFTA), Free Trade Agreement of the Americas

(FTAA), and further World Trade Organization (WTO) agreements, additional impacts on state

and area economies can be expected. More importantly, these economic impacts may occur un-

equally across states and within the state causing economic displacement in terms of jobs or

stress on local infrastructure in cases of economic growth.

PERFORMANCE IMPLICATIONS

NMSU suggests that it is strategically located to lead the implementation of comprehensive re-

search and outreach programs focusing on the Southwest and the U.S.-Mexico trade. As the

Land-Grant University of New Mexico, NMSU has comprehensive research and Extension ca-

pabilities in scientific and technical areas related to agricultural, resource and rural policy Spe-

cifically, these capabilities include the ability to analyze the economic and social impacts of re-

gional trade, and to design and lead in the implementation of “mitigating” program, which may

be adopted by the state of New Mexico or federal authorities.

NMSU will issue periodic assessments and analyses to private-sector businesses, industry repre-

sentative and policy-makers. NMSU will be sensitive to the need to focus on priority issues iden-

tified by an advisory group of public, business and industry leaders who are often first to antici-

pate the potential impacts of policy changes on the region. Strong policy-maker and industry par-

ticipation and feedback will be maintained. Although NMSU will continuously collect and sys-

tematize all relevant data and information, and monitor and conduct analyses of all key proposed,

impending and on-going initiatives, more in-depth specialized studies and presentations re-

quested by federal and state government authorities will be undertaken, resources permitting.

Mitigating program measures will only be explored. Implementation of such policies is the re-

sponsibility of state and federal governments.

BW/yr