HOUSE JOINT MEMORIAL 27

47th legislature - STATE OF NEW MEXICO - second session, 2006

INTRODUCED BY

John A. Heaton

FOR THE STATE PERMANENT FUND TASK FORCE

A JOINT MEMORIAL

REQUESTING THE LEGISLATURE TO REFRAIN FROM "SWEEPING" YEAR-END SEVERANCE TAX REVENUES.

     WHEREAS, the severance taxes attributable to the extraction of New Mexico's natural resources have been a valuable revenue source for the creation and growth of the severance tax permanent fund and for funding bonded indebtedness for capital projects throughout the state; and

     WHEREAS, the severance tax permanent fund is regarded as a "rainy day" fund for the time when New Mexico's natural resources are depleted and severance tax collections will cease; and

     WHEREAS, annual distributions from the severance tax permanent fund to the general fund based on the value of the severance tax permanent fund provide a significant revenue stream for funding state operations; and

     WHEREAS, the continued growth of the severance tax permanent fund is essential to the future welfare of the residents of New Mexico; and

     WHEREAS, the state permanent fund task force undertook a thorough review of the severance tax permanent fund and the associated contributions, investment performance and distributions; and

     WHEREAS, current law provides that up to ninety-five percent of the prior year's severance tax revenues may be used to finance bonded indebtedness and the remainder of the revenue is to be deposited into the severance tax permanent fund; and

     WHEREAS, beginning in 2003, notwithstanding the statutory limitation, the legislature has annually authorized the allocation of the remaining severance tax revenue for issuance of additional supplemental severance tax bonds; and

     WHEREAS, this practice, known as the "sweep" of year-end revenues, has resulted in a cumulative diversion of more than two hundred million dollars ($200,000,000) from the severance tax permanent fund;

     NOW, THEREFORE, BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO that it refrain from future authorizations to "sweep" year-end severance tax revenues that would allow bonded indebtedness in excess of ninety-five percent of prior year revenues; and

     BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the president pro tempore of the senate and the speaker of the house of representatives.

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