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

SPONSOR Herrera

ORIGINAL DATE

LAST UPDATED

2-1-06

2-2-06 HB 522

SHORT TITLE

HIDALGO MEDICAL FACILITY OUTSTANDING

DEBT

SB

ANALYST Hadwiger

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$1,484.5 Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

House Bill 522 appropriates $1.4845 million from the general fund to the Local Government Di-

vision (LGD) of the Department of Finance and Administration (DFA) in FY07 to retire the out-

standing debt of the Hidalgo Medical Services Facility.

FISCAL IMPLICATIONS

The appropriation of $1.4845 million contained in this bill is a non-recurring expense to the gen-

eral fund. Any unexpended or unencumbered balance remaining at the end of FY07 would revert

to the general fund.

SIGNIFICANT ISSUES

DFA indicated that, in 2001, Hidalgo Medical Services Facility (HMSF) applied for and received

a loan from the NMFA. The loan was for the construction of a new facility for Hidalgo Medical

Services. According to the NMFA, the loan was funded from the Primary Care Capital Fund,

which is for non-profit providers. Hidalgo County, along with the City of Lordsburg signed as

guarantors on the loan. The local governments pledged gross receipts tax (GRT) revenues as a

secure guarantee. Annual payments are made on the NMFA loan balance. According to the

House Bill 522 – Page 2

NMFA, the current balance on the HMSF loan as of June 30, 2005 is $1,433,648.64. Payments

are made with HMSF revenues. Hidalgo County wants to apply for an NMFA loan to construct a

new jail facility. Since their GRT revenues are already pledged to guarantee the HMSF loan,

they can't apply for additional funding. Retiring this loan balance would free up Hidalgo

County's GRT revenues and enable them to apply for a loan.

ADMINISTRATIVE IMPLICATIONS

DFA has the capacity to administer this non-recurring appropriation.

TECHNICAL ISSUES

DFA was concerned that no specific recipient is identified in the legislation. Because HMSF is a

non-profit organization, the appropriation must be made to a local government, for payment of

the loan. An appropriation to a non-profit would be a violation of the anti-donation clause. Be-

cause both Hidalgo County and the City of Lordsburg are guarantors on the loan, the appropria-

tion could be made to either entity. Annual payments are made on the NMFA loan balance. Ac-

cording to the NMFA, the current balance on the HMSF loan as of June 30, 2005 is

$1,433,648.64. The legislation language appropriates $1,484,450. The legislation is appropriat-

ing $50,801.36 beyond the actual loan balance. Hidalgo County has an additional NMFA loan.

The outstanding balance on that loan is $1,083,870.08.

AMENDMENTS

Possible amendments include specifying the ultimate recipient of the funds and adjusting the

amount of the appropriation to the current outstanding balance on the HMSF loan.

DH/mt:yr