SENATE MEMORIAL 50

50th legislature - STATE OF NEW MEXICO - first session, 2011

INTRODUCED BY

William H. Payne

A MEMORIAL

REQUESTING THE DEPARTMENT OF FINANCE AND ADMINISTRATION TO CONDUCT A STUDY REGARDING THE EXTENT TO WHICH NEW MEXICO ISSUES CONTRACTS TO NONPROFIT ENTITIES AND THE EFFECT OF THOSE CONTRACTS ON THE STATE IN TERMS OF LOST TAX REVENUES.

     WHEREAS, New Mexico issues thousands of contracts on a yearly basis, resulting in hundreds of millions of dollars of expenditures of appropriated state funds; and

     WHEREAS, the department of finance and administration is responsible for review and approval of all professional services contracts that result in expenditures of greater than five thousand dollars ($5,000); however, the judicial and legislative branches of government, state educational institutions, the New Mexico state fair, the public school insurance authority and the New Mexico finance authority are exempt from this requirement; and

     WHEREAS, there is no central location for collection of data regarding the number, amount and nature of contracts issued by the state; and

     WHEREAS, the criteria for nonprofit organizations to contract with the state are not uniform among agencies with contracting authority; and

     WHEREAS, nonprofit organizations are not subject to the same disclosure requirements as for-profit entities when entering into a contract with the state; and

     WHEREAS, the number of contracts issued to nonprofit organizations versus the number of contracts issued to for-profit entities is not known; and

     WHEREAS, there may be a perceived competitive advantage to issuing a contract to a nonprofit organization, as a nonprofit organization may be able to submit a lower bid than a for-profit entity for provision of the same services; and

     WHEREAS, there is a potential hidden cost to the state of favoring contracts with nonprofits in terms of lost tax revenues, including corporate income tax, personal income tax and gross receipts tax revenues; and

     WHEREAS, the department of finance and administration does not require an entity submitting a bid for a contract to reveal its corporate status; and

     WHEREAS, New Mexico would benefit from standardized contracting requirements and the disclosure of data regarding the corporate status of a contractor and from making a determination of the potential lost revenues that result from a disproportionate number of contracts being awarded to nonprofit organizations;

     NOW, THEREFORE, BE IT RESOLVED BY THE SENATE OF THE STATE OF NEW MEXICO that the department of finance and administration be requested to conduct a study regarding the extent to which New Mexico issues contracts to nonprofit entities and the effect of those contracts on the state in terms of lost tax revenues; and

     BE IT FURTHER RESOLVED that the department of finance and administration consult with the judicial and legislative branches of government, state educational institutions, the New Mexico state fair, the public school insurance authority and the New Mexico finance authority to determine the various processes and criteria that those entities are using to review and award contracts; and

      BE IT FURTHER RESOLVED that the study consider and make recommendations regarding the requirement of disclosure of the corporate status of contractors and the potential for a central location for collection of data regarding contracts issued by the state so that an assessment of lost tax revenues can be determined and posted on the sunshine portal; and

     BE IT FURTHER RESOLVED that a report of the findings and recommendations of the study be presented to the interim revenue stabilization and tax policy committee; and

     BE IT FURTHER RESOLVED that a copy of this memorial be transmitted to the secretary of finance and administration.

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