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

SPONSOR Gonzales

ORIGINAL DATE

LAST UPDATED

8/16/08

8/19/08 HB 3/aHFL#1/aHFL#2

SHORT TITLE Low Income Energy Assistance Programs

SB

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY09

FY10

$4,000

Non-recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB21 and SB7

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department (HSD)

SUMMARY

Synopsis of HFl Amendment #2

House Floor Amendment #2 would prevent the Human Services Department from expending any

of the appropriation on an outside contractor.

Synopsis of HFl Amendment #1

House Floor Amendment #1 strikes the $2 million appropriation for weatherization programs at

the Mortgage Finance Authority.

Synopsis of Original Bill

House Bill 3 appropriates $6 million from the general fund to improve energy use for persons in

poverty in New Mexico. The appropriation is divided as follows:

•

$4 million to the Human Services Department for the low income home energy assistance

program

House Bill 3/aHFL#1/aHFL#2 – Page

2

•

$2 million to the Department of Finance and Administration for weatherization assistance

through the NM Mortgage Finance Authority.

The bill declares an emergency.

FISCAL IMPLICATIONS

The appropriation of $4 million contained in this bill is a nonrecurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of fiscal year 2010 shall

revert to the general fund.

This additional funding could allow HSD to serve up to 75,598 LIHEAP households at the

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

benefit to $166 (based on $23 per point) and serve 62,451 households.

In addition to any new households HSD could serve, many more households could be served by

the Tribes/Pueblos and for weatherization.

SIGNIFICANT ISSUES

In FY08, the state has paid more than $8.3 million to households through LIHEAP, serving more

than 61,392 households. HSD provided the following table:

Year Served

Point Value Average Benefit

2008 63,662 to date $19

$140

2007 62,269

$19

$127

2006 71,794

$65*

$417

2005 55,685

$20

$128

2004 54,234

$20

$127

2003 50,699

$20

$125

2002 40,601

$30

$191

2001 47,018

$40

$250

* In July of 2006, point value was reduced to $25 due to

funding balances

During the 2008 session, $2 million was appropriated to HSD for the LIHEAP program, of

which no less than 15 percent and no more than 25 percent shall be used on weatherization

programs. The federal base grant for 2008 is about $9.5 million, bringing the total funding in

2008 to about $11.5 million. Of this amount, $1.4 million will be used for weatherization

programs at MFA.

House Bill 3/aHFL#1/aHFL#2 – Page

3

LIHEAP FUNDING

Year Federal Base Grant

(in millions)

State Funds

(in millions)

2008

$9.5

$2.0

2007

$9.4

$6.0

2006

$9.4

$12.0

2005

$8.9

$0.0

2004

$8.5

$0.0

2003

$8.5

$0.0

HSD provided the following information:

LIHEAP is a grant from U.S. Department of Health and Human Services (HHS) that

helps New Mexico 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. HSD is the recipient of the federal LIHEAP funds. Up to 15% of the grant

may be used for weatherization, or 25% with an approved waiver. HSD and the

Mortgage Finance Authority enter into an agreement each year to provide funding for

weatherization from the LIHEAP grant.

Appropriating non-recurring funds for a program such as LIHEAP makes it difficult to

adjust the benefit levels in years where there is no general fund appropriation.

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

Affordability Gap for low-income households is $600.00. Although only 62,269 New

Mexico households received LIHEAP in FFY 2007, 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 this

appropriation in HB 3 would help to reduce the un-met need.

In addition, HSD notes that general fund appropriations for this purpose may be credited toward

the Temporary Assistance for Needy Families (TANF) Maintenance of Effort (MOE) when used

to serve low-income households with dependent children. Over $4 million in Temporary

Assistance for Needy Families (TANF) Maintenance of Effort (MOE) was claimed in FFY 2207

using LIHEAP General Fund monies appropriated during the 2007 Legislative Session.

According to HSD, seven tribes in New Mexico that administer their own LIHEAP programs

could receive $318,446 of this appropriation, based on the federal funding formula. If HSD had

to provide funding to Tribes/Pueblos, it would require Joint Powers Agreements with several

Tribes and Pueblos, including Five Sandoval, Navajo Nation, Zuni, Jemez, Laguna, Nambe and

Jicarilla.

ADMINISTRATIVE IMPLICATIONS

HB 3 does not include administrative funds for HSD. HSD uses federal funds to administer the

federal LIHEAP program. HSD will have to re-program the IT system to change the point value

and add separate state funds to supplement the federal LIHEAP benefit. However, no additional

administrative dollars are needed to do this. No additional staff is needed to administer the $4

House Bill 3/aHFL#1/aHFL#2 – Page

4

million appropriated through HB 3 because the number served by the additional appropriation

would not increase significantly (63,662 LIHEAP applications approved as of July 31, 2008).

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

HB 3 Relates to Senate Bill 7 and Senate Bill 21.

BE/mt