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

SPONSOR Lundstrom

ORIGINAL DATE

LAST UPDATED

1/24/07

HB 93

SHORT TITLE Manufacturing Extension Services

SB

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$1,300.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

House Bill 93 duplicates Senate Bill 7.

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$35.0*

$70.0*

0.0 $105.0* Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

*See fiscal and administrative implications sections for more detail.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Economic Development Department (EDD)

SUMMARY

Synopsis of Bill

House Bill 93 appropriates $1.3 million from the general fund to the Economic Development

Department to contract for manufacturing extension services for small and mid-sized

manufacturers. The appropriation is contingent on the receipt of money from the National

Institute of Standards and Technology (NIST) to operate a manufacturing center in New Mexico

that is approved by NIST. The bill declares an emergency.

House Bill 7 – Page

2

FISCAL IMPLICATIONS

The appropriation of $1.3 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of fiscal year 2008 shall revert

to the general fund.

EDD also estimates the need for an additional FTE to manage this contract, resulting in a $105

thousand fiscal impact over three years. According to EDD, the expansion would almost triple

the activity for this contract and would require one FTE to administer this contract. The cost for

an FTE with benefits would be approximately $70,000 per year.

SIGNIFICANT ISSUES

The appropriation of $1.3 million is to provide technical assistance to New Mexico’s emerging

and medium size manufacturing companies, but with a contingency. Manufacturing extension

services is a key technical assistance program of EDD’s Your Homefield Advantage Program.

This assistance helps these companies streamline their processes so that they more efficient and

more competitive. Technical assistance will ultimately result in more jobs and capital

investment in New Mexico. Manufacturing extension services is very valuable to start-up

manufacturers in helping companies design streamlined processes.

PERFORMANCE IMPLICATIONS

In FY07, NMEDD contracted with the NM Manufacturing Extension Partnership (MEP) for

manufacturing extension services. NM MEP assisted manufacturing companies in both rural and

urban New Mexico to improve their manufacturing processes. These manufacturers created

approximately 87 additional jobs; increased their sales by approximately $27.5 million which

resulted in capital investment in New Mexico of over $10.6 million. A snapshot of the

companies that NM MEP assisted are Viviendas in Taos, Syzygy Tile, Inc in Silver City, A & M

Machine Works in Hobbs, Millennium in Roswell and many other companies throughout New

Mexico.

ADMINISTRATIVE IMPLICATIONS

EDD estimates the need for an additional FTE to administer the expansion of this contract.

Due to the contingency, however, it is not clear that this expansion would actually triple the

workload, as EDD estimates. A new NIST-approved manufacturing center would have to be

opened in NM and matching funds allocated for this appropriation to be made. The contingency

suggests that only one contract would be required.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Bill 93 duplicates Senate Bill 7.

BE/nt:csd