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

SPONSOR

Cheney

ORIGINAL DATE

LAST UPDATED

2-8-06 HB 792

SHORT TITLE Interstate Water Project Financing

SB

ANALYST Woods

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to: HB132, HB134, HB272, HB296, HB499, HB683, HJM21, HJR6, SB80,

SB93, SB194, SB224, SB301, SB586 and SB637

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of the State Engineer-Interstate Stream Commission (OSE)

New Mexico Environment Department (NMED)

New Mexico Finance Authority (NMFA)

SUMMARY

Synopsis of Bill

House Bill 792, relating to water, seeks to amend to Water Project Finance Act to provide for

funding interstate projects that benefit New Mexico.

FISCAL IMPLICATIONS

The Office of the State Engineer-Interstate Stream Commission (OSE) notes that this legislation

amends the Water Project Finance Act, NMSA (1978) § 72-4A-6 (2003) to allow the New Mex-

ico Finance Authority (NMFA) to make loans or grants to qualified entities for interstate water

projects that directly benefit New Mexico. More specifically, the legislation would allow pro-

jects that are not wholly within the boundaries of the State to receive funding from the Water

Project Fund. This would increase the number of projects that are eligible to receive funding

from the Water Trust Board. The funding for such projects may also increase the availability of

House Bill 792 – Page

2

funding for the project from other sources, most notably from other states and the federal gov-

ernment.

ADMINISTRATIVE IMPLICATIONS

The New Mexico Finance Authority (NMFA) indicates that the Water Project Finance Act cre-

ated the Water Trust Fund and the Water Project Fund which are administered by NMFA. Pro-

jects funded from the Water Project Fund are reviewed and recommended to the Legislature by

the Water Trust Board (WTB) for legislative authorization. After the projects are authorized by

the Legislature, the WTB prioritizes and approves the projects for funding at specific amounts.

NMFA additionally indicates that while the legislation does not contain an appropriation, the bill

expands the number and type of projects which qualify for financing under the Water Project Fi-

nance Act.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

NMFA notes a number of related bills:

HB 134, HB 296 and SB 93 are duplicates which appropriate $100 million from the

General Fund to the Water Trust Fund for expenditure in FY06 and subsequent fiscal

years to carry out the purposes of the Water Project Finance Act.

SB 194 essentially duplicates the intent of HB 134, HB 296 and SB 93 but is written

to provide that “$100 million of the nonrecurring revenue of the general fund remain-

ing at the end of fiscal year 2006 shall be transferred to the water trust fund”.

HB 272 transfers $100 million from the General Fund to the Water Project Fund for

distribution pursuant to law after January 1, 2007. This bill is a companion bill to

House Joint Resolution 6.

HJR 6 proposes a Constitutional Amendment (CA) to be approved by the voters in the

2006 general election which would establish the Water Trust Fund in the Constitution.

HJR 6 is contingent upon enactment into law during the current legislature session of a

bill which transfers $100 million to the Water Trust Fund. This CA is a companion

bill to HB 272.

HB 499 appropriates $100 million from the General Fund to the Water Trust Fund for

expenditure in FY06 and subsequent fiscal years for purposes of the Water Project Fi-

nance Act. This bill also amends the Water Project Finance Act to provide that money

in the Water Trust Fund shall not revert at any time.

HB 132 amends the Water Project Finance Act to provide that money in the Water

Trust Fund “shall not revert” at any time.

SB 224 amends the Water Project Finance Act to delete the provision that 10% of all

Water Project Funds shall be dedicated to water rights adjudication.

HJM 21 requests the Legislative Council to appoint a Task Force to assess options for

House Bill 792 – Page

3

creating a continuing funding mechanism for the Water Trust Fund.

SB 301 authorizes the issuance and sale of General Obligation Bonds for a wide vari-

ety of capital projects throughout the State. The bill appropriates $20.0 million to the

Water Project Fund to carry out the provisions of the Water Project Finance Act. SB

301 requires the approval of the voters in the 2006 general election.

SB 637 and HB 683 are duplicates which authorize the NM Finance Authority

(NMFA) to make loans or grants from the Water Project Fund to local qualified enti-

ties for thirty water projects statewide. The terms and conditions of the loans or grants

will be established by the Water Trust Board and the NMFA.

SB 586 appropriates $4.0 million to the Office of the Attorney General for expenditure

in FY07 and subsequent fiscal years for legal and technical expenses related to inter-

state water conflicts pursuant to the Rio Grande Compact and the Colorado River

Compact.

SB 80 appropriates $100 million to the Office of the State Engineer for expenditure in

FY06 and FY07 to pay the costs of water rights adjudications including interstate wa-

ter disputes.

TECHNICAL ISSUES

NMFA suggests that, originally, the Water Project Finance Act defined the following five cate-

gories or types of projects as being eligible for funding: 1) the storage, conveyance or delivery

of water to end-users; 2) the implementation of Federal Endangered Species Act collaborative

programs; 3) the restoration and management of watersheds; 4) flood control; and 5) water

conservation. However, in 2005, the Act was amended to add the category of “water rights ad-

judication” and to provide for automatic funding of this category in an amount equal to ten per-

cent of the annual distribution to the Water Project Fund.

OTHER SUBSTANTIVE ISSUES

NMFA concludes by observing that, in FY05, the Water Trust Board received over $129 million

worth of requests to fund water related projects, and over $2 billion in water related needs have

been identified throughout the State. Since its inception, the WTB has recommended $47 mil-

lion of grant funding for 47 projects in 29 local entities statewide. This State funding has lever-

aged more than $50 million of local and/or federal funding.

BW/yr