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committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

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

SPONSOR Fox-Young

ORIGINAL DATE

LAST UPDATED

2/10/06

HB 819

SHORT TITLE Public Money Bond Authorization

SB

ANALYST Kehoe

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$31,000.0

Non-Recurring

General Fund

$88,600.0 Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates,Relates to,Conflicts with, Companion to

Duplicates Appropriation in the General Appropriation Act

Relates to Appropriation in the General Appropriation Act

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

$31,000.0

Non-Recurring State Building

Bond Fund

$88,600.0

Non-Recurring State Building

Bond Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department (TRD)

General Services Department (GSD)

New Mexico Finance Authority (NMFA)

SUMMARY

House Bill 819 appropriates $119.6 million from the general fund for defeasance of all out-

standing State Office Building Tax Revenue Bonds; and appropriates funds for certain capital

House Bill 819 – Page

2

projects for which the bonds have been authorized.

FISCAL IMPLICATIONS

House Bill 819 appropriates $31 million from the general fund to the state building bonding fund

for expenditure in fiscal years 2006 and 2007 for the purpose of retiring all outstanding state of-

fice building tax revenue bonds. Any unexpended or unencumbered balances remaining at the

end of fiscal year 2007 shall revert to the general fund.

The bill appropriates $88.6 million from the general fund to the Property Control Division of the

General Services Department for expenditure in fiscal years 2006 through 2011 for certain capi-

tal outlay projects as follows:

•

$23.5 million to purchase, renovate, equip and furnish the Public Employees Retirement

Association (PERA) building located on the central capitol campus in Santa Fe, at a ne-

gotiated price that is not less than fair market value.

•

$8 million to plan, design, construct and equip a parking structure located on the central

capitol campus in Santa Fe to be transferred to and operated by the Legislative Council

Service.

•

$31.8 for land acquisition and to plan, design, construct and equip a state laboratory fa-

cility in Albuquerque.

•

$10.3 million for capital projects at the Southern New Mexico Rehabilitation Center

(SNMRC) at Roswell.

•

$11 million for capital projects at the New Mexico Behavioral Health Center (NMBHC)

at Las Vegas.

•

$4 million for capital projects at the Fort Bayard Medical Center (FBMC) near Silver

City.

The bill repeals Section 8 of Laws of 2005 (Chapter 320) which eliminates authorization for $39

million in revenue bonds payable from cigarette tax revenues for SNMRC, NMBHC, FBMC,

and the state laboratory currently under construction in Albuquerque.

The New Mexico Finance Authority (NMFA) reports approximately $43 million of debt service

balance remains on the State Office Building Revenue Bonds and confirms the cost to retire the

bonds is $31 million, assuming the state would purchase an escrow and earn at least 4.36 per-

cent. This represents a $12 million in savings over the life of the bonds.

According to TRD, the proposed bill does not address the earmark of $6 million of gross receipts

tax revenue which currently goes to the State Office Building Fund to pay debt service on the

outstanding bonds. If the bonds proposed in this bill are retired, it may be possible to eliminate

the earmark of the revenues and allow the money to flow back into the general fund.

SIGNIFICANT ISSUES

The New Mexico Finance Authority in 2002 issued $34,695,000 of State Office Building Tax

Revenue bonds for three projects authorized by the Legislature. The projects included purchase

of the NEA building, West Capitol Complex and the acquisition of land on Cerrillos Road in

Santa Fe. The bonds are secured with a pledge of the first $500,000 per month in gross receipts

House Bill 819 – Page

3

tax collections from the state.

In addition, NMFA issued bonds for the Department of Cultural Affairs for $5,760,000 in 2003.

This debt is secured by the same revenue stream and has approximately $5,613,000 outstanding,

but the debt is currently callable.

The four Department of Health projects listed above were authorized by the Legislature in 2005

and financed through the issuance of bonds by NMFA with a pledge of cigarette tax revenues

and a backup pledge of the cigarette tax credit enhancement account. The bonds have not been

issued as of this date.

LMK/mt