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 Anderson

ORIGINAL DATE

LAST UPDATED

2-1-2008

2-7-2008 HJM 29/aHEC

SHORT TITLE Enact Federal Public Lands & Education Act

SB

ANALYST Woods

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB 241, HB 229, HB 311, HB 398, HJR 8, and HJR 10

SOURCES OF INFORMATION

LFC Files

Responses Received From

State Land Office (SLO)

Public Education Department (PED)

SUMMARY

Synopsis of HEC Amendment

As included in the resolutions on page 4, lines 2 through 13, House Education Committee

amendment to House Joint Memorial 29 clarifies language that identifies federal legislation.

Specifically, the amended resolutions now read:

NOW, THEREFORE, BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF

NEW MEXICO that passage of federal legislation that would authorize western states to

make selections of public land within their borders in lieu of receiving five percent of the

proceeds of the sale of public land lying within their borders, be supported; and

BE IT FURTHER RESOLVED that the New Mexico congressional delegation be

requested to actively work for the passage of federal legislation so that New Mexico may

receive federal payments or land that will contribute to education improvement for New

Mexico's school children; and

House Education Committee amendment to House Joint Memorial 29 adds no appropriation to

the legislation.

House Joint Memorial 29/aHEC – Page

2

Synopsis of Original Bill

House Joint Memorial 29 notes that the ability of Western States to fund education is directly

related to federal ownership of state lands because, among other factors, state and local property

taxes upon which public education relies heavily cannot be assessed on federal lands. This

resolution supports H.R. 3614 or S. 2072, also known as the Action Plan for Public Lands and

Education Act of 2007, which would authorize western states to make selections of public land

within their borders in lieu of receiving five percent of the proceeds of the sale of public land

lying within their borders. Furthermore, that the New Mexico congressional delegation be

requested to actively work for the passage of these bills so that New Mexico may receive federal

payments or land that will contribute to education improvement for New Mexico's school

children.

FISCAL IMPLICATIONS

SLO indicates that while this is promoted as being a replacement for the 5 percent from sales of

public lands due the state under the federal government’s plan at the time of statehood, no effort

is made to demonstrate how 5 percent of the land would be equivalent to 5 percent of the land

sales.

PED suggests that the fiscal implications cannot be determined at this time; “The amount of

funding or land that would be distributed to New Mexico as a result of the passage of H.R. 3614

and S. 2072 would determine the additional revenues to the state for public education. These

properties would be managed by the New Mexico State Land Office, which would deposit the

royalties from leasing the properties into the Land Grant Permanent Fund that invested through

the State Investment Council. Public education is a beneficiary of these investments."

SIGNIFICANT ISSUES

SLO advises, as introduced into the 110th Congress, 1st Session, H. R. 3614, Action Plan for

Public Lands and Education Act of 2007 SEC. 3. QUANTITY GRANTS TO WESTERN

STATES FOR EDUCATION IMPROVEMENT states the following:

(e) Permanent School Fund- All land selected by each of the Western States

shall be held in trust by the State agency empowered to sale or lease such lands,

the proceeds of which shall be used as a permanent fund, the interest of which

shall only be expended for the support of public education.

Following these definitions, SLO indicates that it is assumed that in the State of New Mexico,

the New Mexico State Land Office is the agency that shall be empowered with administering the

selected lands. If the lands selected are on subsurface mineral, oil, gas properties making royalty

payments to the United States, the leasehold interest will remain in the ownership of the US.

After those rights terminate, the subsurface mineral rights shall become the property of the

Western State. Assuming most federal leases are “for so long as there is production" type

leases, little benefit may come to the state from waiting until all mineral resources were

exhausted (and all royalties paid to the federal government) before any value was derived.

PED adds that, according to the study conducted by the Public School Funding Formula Task

Force, the amount of funding to obtain sufficiency is an additional $354.2 million above current

House Joint Memorial 29/aHEC – Page

3

funding levels. It appears that the passage of H.R. 3614 and S. 2072 would allow for some of the

additional funding necessary to implement the Public School Funding Formula Task Force

recommendation. Ultimately, the passage of H.R. 3614 and S. 2072 appears to provide some

additional funding to allow implementation of a new proposed public school funding formula

that impacts all public school support performance measures

.

PERFORMANCE IMPLICATIONS

SLO states, “If lands are selected in lieu of receiving 5% for sale of public lands and the New

Mexico State Land Office is charged with administering those lands without an increase in

operating budget, administrative performance may be reduced."

ADMINISTRATIVE IMPLICATIONS

SLO suggests that the law does not specify who would be charged with the selection of the lands,

or with dealing with the federal government in having those selections confirmed and granted.

This will require significant staff time and funding to do. The lands granted could be managed

by the Commissioner of Public Lands. Funds derived from them would go into the permanent

fund to be managed by the State Investment Council. It is unclear if the income, if any, derived

from the granted lands, could cover the costs of administering them and additional resources may

be necessary for effective management. In addition, it is unclear if these selected lands would be

burdened with any additional federal land management requirements due to the transfer of

federal lands to the states.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

PED indicates the legislation relates to HB241, which proposes a new public school funding

formula for the State of New Mexico. Also relates to HB 229, HB311, HB398, HJR 8, and HJR

10 which provide additional funding to enact the new public school funding formula.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

SLO indicates that it “will continue to manage existing trust lands for their beneficiaries."

BFW/mt