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

SPONSOR Sandoval

ORIGINAL DATE

LAST UPDATED

01/24/08

HB 219

SHORT TITLE Low-Income Home Energy Assistance

SB

ANALYST Weber

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

$10,000.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department (HSD)

New Mexico Finance Authority (NMFA)

Energy Minerals and Natural Resources (EMNR)

SUMMARY

Synopsis of Bill

House Bill 219 appropriates $10 million from the general fund to the Human Services

Department for home heating and weatherization for households that qualify for the low-income

home energy assistance program (LIHEAP).

FISCAL IMPLICATIONS

The appropriation of $10 million contained in this bill is a recurring expense to the general fund

general fund. Any unexpended or unencumbered balance remaining at the end of FY09 shall

revert to the general fund.

SIGNIFICANT ISSUES

HSD notes that the bill does not apportion the funds to be used for LIHEAP benefits verses

weatherization funding. LIHEAP federal funding limits the amount used for weatherization to

15% of the base grant or 25% with a waiver. Assuming this same limitation, HSD could utilize

House Bill 219 – Page

2

$1,500,000 for weatherization (15%) and $8,500,000 for LIHEAP benefits (assuming a 5%

administrative cost and a Tribal share of $676,698.00 based on the federal formula).

This additional funding could allow HSD to serve up to 105,910 LIHEAP households at the

current average benefit of $140 (based on $19 per point); or HSD could increase the average

benefit to $202 (based on $28 per point) and serve 71,867 households. Another alternative is to

use all or a portion of these funds for a special bulk fuel project. The current bulk fuel project

began October 1, 2007 and is expected to run for one year or until funding runs out. LIHEAP

participants that heat their home with bulk fuels such as propane, wood, wood pellets fuel oil or

coal are eligible for an additional $300. HSD, through HELP New Mexico is using carry-

forward federal funds from FFY 2007 to provide this extra benefit because of increased costs for

these fuel types (sometimes as much as 27% increase from last year). These carry-forward funds

accrued when HSD used the SFY 2007 state funds provided by the Legislature for most of the

SFY 2007 LIHEAP benefits.

New Mexico Finance Authority contributes the following regarding the weatherization program.

This bill provides additional funding to the NM Energy$mart program which increases the

energy efficiency and reduces the residential energy costs of homes occupied by low-income

people, while improving their health and safety.

Funding for NM Energy$mart (Weatherization Assistance Program) in 2007 program year is:

FUNDING

DOE $1,874,902 (received 7/07)

STATE Funding (DFA Budget) $ 800,000 (received 10/07)

LIHEAP Funding $ 710,000 (received 2/07)

LIHEAP Funding $ 693,506 (received 6/07)

PNM Gas Energy Efficiency Act Funding $ 823,453 (received 12/07)

Total Funding: $5,126,861

1607 homes have been weatherized with this funding from the months of 7/06 through 6/07

Energy and Minerals adds that providing weatherization services is critical to reducing energy

expenditures for low income households. According to Oak Ridge National Labs’ Joel

Eisenberg, low-income families spend 15 percent of their income on energy, compared to three

percent for the average family. Savings follows waste, thus those who consume large amounts of

energy have great energy efficiency potential. Eisenberg recommends targeting high burden,

high usage households, which are those whose energy bills exceed $2600 per year. Key are

energy audits, when performed by trained diagnosticians, to get cost effective weatherization and

energy efficiency improvements installed in low-income families’ homes. Without

weatherization services, low income families will continue to pay high energy bills and need

continuing home heating utility assistance.

MW/nt