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

SPONSOR

Senate Finance

Committee

ORIGINAL DATE

LAST UPDATED

3-5-07

HB

SHORT TITLE

Erroneous Public Land Payment Refunds

SB

470/SFCS

ANALYST

Woods

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

500.0

Recurring

State Land

Maintenance

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

NFI

($1,000)*

($1,000)* Recurring State Land Office

Permanent

(Parenthesis ( ) Indicate Expenditure Decreases)

*State Land Office Projections

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico State Land Office (SLO)

SUMMARY

Synopsis of Bill

Senate Finance Committee Substitute for Senate Bill 470, relating to public lands, seeks to

address the issue of refunds for erroneous payments. The State Land Office (SLO) notes that the

legislation seeks to amend 19-7-59 1.C which relates to the limit on erroneous payments that can

be recouped without SLO approval, and would change the limit requiring SLO approval from

$25,000 to $50,000.

Senate Bill 470/SFCS – Page

2

The bill seeks to appropriate $500,000 annually out of the State Lands Maintenance Fund created

by Section 19-1-11 NMSA 1978 or such part thereof as may be necessary for the purpose of

making refunds of payments determined in the manner provided by Sections 19-7-59 through 19-

7-63 NMSA 1978 to have been erroneously collected; provided, however, that any refund of

money paid into any fund other than the state lands maintenance fund shall be made only out of

that part of the state lands maintenance fund distributable to the fund into which such payment

was erroneously made, under the provisions of Section 19-1-13 NMSA 1978."

The effective date of the provisions of this legislation is July 1, 2007.

FISCAL IMPLICATIONS

SLO indicates that in reviewing the Land Office recoupments/refunds for the past two years the

average is $1,000,000 per year. The additional four years to file for recoupments/refunds is

assumed to be in the same fiscal range. Underlying any recoupment or refund is the premise that

the money was not due the state in the first place so any revenue impact is technically money that

is not due the state under its lease but was paid by mistake.

SIGNIFICANT ISSUES

SLO notes that the effective date is July 1, 2007 which raises the question whether

recoupment/refunds will be allowed to go back six (6) years from that date or with royalty

obligations accruing after the effective date. SLO interprets the new law to only apply to royalty

obligations that become due after July 1, 2007. Further, SLO anticipates that the bill will also

increase audit workload for reviews of additional royalty obligations to determine their

correctness.

ADMINISTRATIVE IMPLICATIONS

SLO suggests that programming modifications and testing of the ONGARD system will be

required to comply with the new limits.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

SLO suggests that the two-year period to initiate refunds and recoupments will remain in effect.

BFW/csd