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F I S C A L I M P A C T R E P O R T
SPONSOR Trujillo
ORIGINAL DATE
LAST UPDATED
2-27-07
3-08-07 HB 859/aHAFC
SHORT TITLE Cesspool Elimination Assistance Act
SB
ANALYST Aubel
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
$4,000.0
Non
-
Recurring
General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
FY09
$4,000.0
Non
-
Rec
Cesspool Elimination
Assistance Grant
Program Fund
(Parenthesis ( ) Indicate Revenue Decreases)
Relates to SB 702, SB 920 and HB 1130
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)
FY07
FY08
FY09 3 Year
Total Cost
Recurring
or Non-Rec
Fund
Affected
Total
.01*
.01*
*See
narrative Recurring General
Fund
$4,000.0
Non-
Recurring General
Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
New Mexico Environment Department (NMED)
New Mexico Municipal League (NMML)
pg_0002
House Bill 859/aHAFC – Page
2
SUMMARY
Synopsis of HAFC Amendment
The House Appropriations and Finance Committee Amendment makes two changes:
1.
The maximum household income threshold is reduced from 250 percent of the federal
poverty level to 150 percent. As can be seen from the chart below, for a four-person
household, this amendment would lower the maximum household income in order to
qualify for the program from $51.6 thousand to just under $31 thousand.
The Federal poverty level rates are as follow for calendar year 2007:
2007 POVERTY LEVEL GUIDELINES
ALL STATES (EXCEPT ALASKA AND HAWAII) AND DC
Income Guidelines as Published in the Federal Register on January 24, 2007
ANNUAL GUIDELINES
FAMILY
100% 133% 150% 170% 175% 185% 200% 250%
SIZE POVERTY*
1
10,210 13,579 15,315 17,357 17,868 18,889 20,420 25,525
2
13,690 18,208 20,535 23,273 23,958 25,327 27,380 34,225
3
17,170 22,836 25,755 29,189 30,048 31,765 34,340 42,925
4
20,650 27,465
30,975 35,105 36,138 38,203 41,300
51,625
5
24,130 32,093 36,195 41,021 42,228 44,641 48,260 60,325
6
27,610 36,721 41,415 46,937 48,318 51,079 55,220 69,025
7
31,090 41,350 46,635 52,853 54,408 57,517 62,180 77,725
8
34,570 45,978 51,855 58,769 60,498 63,955 69,140 86,425
2.
The appropriation of $4.0 million is removed and language is inserted to reflect a future
appropriation by the Legislature.
Synopsis of Original Bill
House Bill 859 appropriates $4.0 million from the general fund to a new fund, the cesspool
elimination assistance grant program fund for the purpose of assisting indigent homeowners with
replacing cesspools with modern liquid waste systems. In order to qualify for assistance, the
homeowner must have an income that does not exceed 250 percent of the federal poverty level.
FISCAL IMPLICATIONS
The appropriation of $4.0 million contained in this bill is a non-recurring expense to the general
fund. Any unexpended or unencumbered balance remaining at the end of fiscal year 2008 shall
not revert to the general fund.
Continuing Appropriations
This bill creates a new fund and provides for continuing appropriations. The LFC has concerns
with including continuing appropriation language in the statutory provisions for newly created
funds, as earmarking reduces the ability of the legislature to establish spending priorities.
pg_0003
House Bill 859/aHAFC – Page
3
HB 859 provides for administration of the fund by NMED, but does not specify that such support
will be paid from the new fund. Any additional FTE to manage the selection process and fund
disbursement would require general fund.
SIGNIFICANT ISSUES
Cesspools were a recognized and legal liquid waste disposal system until 1973, when they were
outlawed in the State of New Mexico. Despite having been illegal for 34 years, many cesspools
remain in use in the state and are being discovered during property transfer inspections.
NMED states that failed or improperly installed septic systems, which include cesspools, are the
leading source of groundwater pollution and have impaired 355 river miles in New Mexico.
Since cesspools allow the seepage of raw sewage into the soil, they do not provide the primary
level of wastewater treatment that conventional septic tank systems provide. Cesspools can pose
public health and safety hazards related to entrapment, asphyxiation, and drowning.
The bill creates a cesspool elimination assistance grant program fund for the purpose of assisting
qualified indigent people or households to pay for: the pumping, abandonment and replacement
of cesspools located on the recipient's property; permitting, site evaluation, design, purchase and
installation costs of a new on-site liquid waste treatment and disposal system; and up to two
years of maintenance, operation and any required testing of the on-site liquid waste treatment
and disposal system.
PERFORMANCE IMPLICATIONS
HB 859 would facilitate the elimination of cesspools and thereby reduce the amount of water-
quality degradation and risks to public health and safety caused by these illegal systems.
ADMINISTRATIVE IMPLICATIONS
NMED will be charged with establishing rules concerning the eligibility, priority and application
and selection of individuals that may participate in this program. NMED notes that clear
guidelines for disbursement would be helpful.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
HB 859 is similar to, but more limited in scope than Senate Bill 702. Senate Bill 702
appropriates $200.0 thousand from the corrective action fund for the purpose of establishing a
liquid waste system assistance fund for the replacement of improper liquid waste systems but is
not limited only to cesspools.
Relates to Senate Bill 920 and HB 1130 (duplicate), which appropriates $5.0 million from the
general fund to the liquid waste revolving loan fund for making low-interest loans to indigent
homeowners to purchase, permit, install and maintain on-site liquid waste treatment systems.
pg_0004
House Bill 859/aHAFC – Page
4
TECHNICAL ISSUES
NMED notes that a clarification regarding “indigent recipient" might be necessary, as follows:
HB 859 defines “indigent recipient" based on household income that does not exceed 250
percent of the federal poverty level. The federal government, however, has established differing
poverty guidelines and poverty thresholds, and HB 859 does not specify which is to be used.
•
Health and Human Services Department (HSSD) poverty guidelines:
http://aspe.hhs.gov/poverty/05poverty.shtml
•
Census Bureau poverty thresholds:
http://www.census.gov/hhes/www/poverty/threshld/thresh05.html
These federal poverty levels, and the corresponding 250 percent income level proposed by HB
859 for indigent recipients, are compared in the table below for different households.
Household Occupants HSSD HSSD * 2.5 Census Census * 2.5
2 adults, 2 children $19,350 $48,375 $19,806 $49,515
1 adult, 2 children $16,090 $40,225 $15,735 $39,337
Although the difference between the amounts generated by the two thresholds is not significant,
specifying the guideline to be used would eliminate any possible confusion in the program’s
implementation.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
If HB 859 is not enacted, a smaller number of illegal cesspools will be replaced with modern
liquid waste systems.
AMENDMENTS
NMED suggests the following amendments:
•
Expand the scope of HB 859 to include other illegal or improper liquid waste systems.
•
Define which federal poverty level is to be used.
•
Provide clearer guidelines for fund disbursements may be needed.
MA/mt:csd