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

SPONSOR Foley

ORIGINAL DATE

LAST UPDATED

1/27/06

1/30/06 HB 554

SHORT TITLE Transfer to Land Grant Permanent Funds

SB

ANALYST Schardin

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$100,000.0

Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

$960.5 Recurring General Fund

$199.5 Recurring LGPF “Other

Beneficiaries”

$100,000.0

Non-Recurring

Land Grant

Permanent

Funds

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB 41, HB47 and SB66.

SOURCES OF INFORMATION

LFC Files

Responses Received From

State Investment Council (SIC)

Department of Finance and Administration (DFA)

House Bill 554 – Page

2

SUMMARY

Synopsis of Bill

House Bill 41 would transfer $100 million from the general fund to the land grant permanent

funds (LGPF) at the end of FY06.

FISCAL IMPLICATIONS

Transferring $100 million from the general fund to the LGPF would increase the LGPF corpus

by $100 million. The average market value of the LGPF at the end of the last five calendar year’s

is the base for 5.8 percent distributions to the general fund (about 82.8 percent) and the LGPF’s

other beneficiaries (about 17.2 percent), so it will take five years for general fund distributions

from the LGPF to fully reflect the injection to the LGPF corpus. Increasing the market value by

$100 million during CY2006 would increase LGPF distributions by $1,160 thousand in FY08,

$2,408 thousand in FY09, $3,738 thousand in FY10, $5,142 thousand in FY11, and $6,609 thou-

sand in FY12.

SIGNIFICANT ISSUES

Transferring $100 million from the general fund to the LGPF would reduce the FY07 transfer to

general fund reserves by $100 million. The LFC currently projects general fund reserves to total

$1.044 billion at the end of FY06. This amount includes $352.5 million in the general fund oper-

ating reserve, $137.1 million in the appropriation contingency fund, $83.9 million in the tobacco

permanent fund, and $470.3 million in the tax stabilization reserve. Both the LFC and the gover-

nor have adopted a target of keeping general reserves at 10 percent of recurring appropriations,

which equals $471 million in FY06. Transferring $100 million to the LGPF would reduce gen-

eral fund reserves to a level of $943.8 million, or 20.0 percent of recurring appropriations.

The LGPF is owned by several entities, which are listed in the table below. Each entity receives

a distribution from the LGPF in proportion to their percent ownership.

House Bill 554 – Page

3

LGPF Beneficiaries

Percent

Ownership

General Fund/Public Schools

82.86%

N.M. Military Institute

3.55%

N.M. School for the Deaf

2.14%

N.M. School for the Visually Hdcp.

2.13%

Penitentiary of N.M.

2.07%

University of N.M.

1.69%

Public Buildings at Capital

1.21%

Miners Hospital of N.M.

1.12%

Water Reservoirs

1.03%

Charitable Penal and Reform

0.81%

N.M. State University

0.45%

Im provem ent of the Rio Grande

0.33%

N.M. State Hospital

0.24%

N.M. Institute of Mining and Tech.

0.20%

Eastern N.M. University

0.10%

Western N.M. University

0.03%

N.M. Highlands University

0.03%

Northern N.M. State School

0.02%

UNM Saline Lands

0.01%

N.M. Boys School

0.01%

TOTAL

100%

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Bill 554 relates to House Bill 41, House Bill 47, and Senate Bill 66.

SS/yr:mt