Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

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

if they are used for other purposes.

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

SPONSOR Altamirano

ORIGINAL DATE

LAST UPDATED

1/26/07

2/21/07 HB

SHORT TITLE

Home Heating Relief

SB 323/aSPAC/aSFC

ANALYST Francis

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

6,000.0

Nonrecurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates Appropriation in the General Appropriation Act

Relates to Appropriation in the General Appropriation Act

Relates to SJM3, HB121, SB325, SB114, SB328

Duplicates HB372

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

6,000.0

Nonrecurring

Gasoline and

Home Heating

Relief Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Human Services Department

Responses Received From

Human Services Department (HSD)

Department of Finance and Administration (DFA)

Senate Bill 323/aSPAC/aSFC – Page

2

SUMMARY

Synopsis of SFC Amendment

The Senate Finance Committee amended Senate Bill 323 changing the appropriation from $9

million to $6 million.

Synopsis of SPAC Amendment

The Senate Public Affairs Committee amended Senate bill 323 to make the appropriation

nonrecurring. As the original bill was written the appropriation was considered a recurring

appropriation. Any amount at the end of FY07 reverts to the general fund.

Synopsis of Original Bill

Senate Bill 323 appropriates $9 million from the general fund to the gasoline and home heating

relief fund for expenditure in FY07 and subsequent years. The money in the fund is to be used

for the low-income home energy assistance program (LIHEAP), a program administered by

Human Services Department (HSD) with state and federal funds.

HSD:

LIHEAP is a grant from US Department of Health and Human Services (HHS) that helps

NM low-income families meet the costs of home heating and cooling one time per year and

increase energy self-sufficiency and reduce vulnerability resulting from energy needs. SB

323 adds general fund to supplement the federal funds available for this purpose.

This bill has an emergency clause and so will take effect immediately upon signing.

FISCAL IMPLICATIONS

The SFC amendment changes the appropriation to $6 million.

The SPAC amendment makes the appropriation nonrecurring and allows it to revert to the

general fund at the end of FY07.

Original Bill:

The appropriation of $9 million contained in this bill is a RECURRING expense to the

GENERAL FUND. Any unexpended or unencumbered balance remaining at the end of each

fiscal year shall not revert to the GENERAL FUND. LFC considers an appropriation that

does not revert to the general fund and is used for an ongoing program a recurring

appropriation.

Continuing Appropriations

This bill provides for continuing appropriations. The LFC has concerns with including

continuing appropriation language in the statutory provisions, as earmarking reduces the

ability of the legislature to establish spending priorities.

Senate Bill 323/aSPAC/aSFC – Page

3

SIGNIFICANT ISSUES

In the 2005 special session, $25 million was appropriated to Human Services Division (HSD) to

administer LIHEAP. The session also created the Gasoline and Home Heating Relief Fund as a

vehicle for contributions, appropriations and gifts but the fund has never had a non-zero balance.

Two important features of the LIHEAP program is that HSD will capture 10 percent of the

appropriation for administration and 15 percent of the appropriation will be expended for

weatherization.

HSD:

According to 2006 Fisher, Sheehan & Colton publications, the Home Energy Affordability

Gap for low income households is $600. Although only 71,794 NM households received

LIHEAP in FFY 2006, there are approximately 180,530 households that meet the LIHEAP

income eligibility limit of 150% of Poverty (2000 Decennial Census 2/2005). Using the

Home Energy Affordability Gap of $600, the total approximate energy need for 180,530

households is $108,318,000. Receiving an undetermined amount in general funds would

help to reduce the un-met need.

HSD has provided a table of the payments shown below. SB323 would fit between the $8

million and the $10 million columns and depending on the level of “point value option" HSD

could serve 33 thousand to over 100 thousand households. At the FY06 level of benefit of $65

per point, the program would serve 36,449 to 40,709 households in FY08. A point value is

based on the available funding and a household’s points are determined by income and family

size.

Senate Bill 323/aSPAC/aSFC – Page

4

ADMINISTRATIVE IMPLICATIONS

HSD reports that it will cost $175.1 thousand to re-configure their systems to accommodate

anticipated changes. $101.6 thousand can come from federal funds and $73.5 thousand from the

general fund through the appropriation process. Their analysis also includes a request for 10

percent of the appropriation for administrative costs or $900 thousand.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Bill 2, the General Appropriations Act, includes a $12 million appropriation to HSD ($6

million in the base budget and $6 million as a special appropriation) for LIHEAP.

House bill 372, a similar bill, appropriates $9 million to HSD for LIHEAP to the gasoline and

home heating relief fund, a fund already established for distribution of heating assistance.

House bill 121 creates a distribution from oil and gas emergency school severance tax and

creates a new fund for the same purposes.

Senate Joint Memorial 3 calls on the Federal government to maintain and increase funding for

LIHEAP.

OTHER SUBSTANTIVE ISSUES

Some of the state funded LIHEAP payments can be considered income for food stamp purposes.

None of the federal portion can be considered income. The vouchers that are directly paid to

recipients, primarily for households that use wood for heat, are more likely to be considered

income for the purposes of food stamp eligibility. HSD reports that is a very small amount. Even

with these vouchers counting as income most are likely still eligible for participation in the food

stamp program.

HSD:

LIHEAP benefits paid for with federal funds are not

countable as income for food

stamps. LIHEAP benefits paid for with state funds

that can be converted to cash

are

considered income for food stamp eligibility purposes. When the LIHEAP payment

either state or federal is paid directly to a vendor then none of it can be converted to

cash. Some households that do not use a LIHEAP utility vendor like those that heat with

wood where their vendor does not choose to be a LIHEAP vendor, receive the LIHEAP

payment in a cash voucher directly. If the LIHEAP participant receives the LIHEAP

benefit directly and applies or recertifies for food stamps in the same month, the

eligibility worker will have to count the state funded portion as income to the

household. Last year the LIHEAP letters we issued to participants said that for each

LIHEAP point, $40 was state money and $25 was federal for a total $65 point value.

According to the US Health and Human Services Division,

The amount of any LIHEAP payments or allowances provided directly to, or indirectly

for the benefit of, an eligible household shall not be considered income or resources of

that eligible household (or any member thereof) for any purpose under any Federal or

State law, including any law relating to taxation, food stamps, public assistance, or

Senate Bill 323/aSPAC/aSFC – Page

5

welfare programs.

HSD is concerned that the appropriation is to the Gasoline and Home Heating Relief fund which

is administered by the department of finance and administration rather than directly to HSD.

ALTERNATIVES

One possible amendment could be to exempt all state payments for LIHEAP from consideration

for food stamps and other social assistance programs.

NF/mt