HB 5

Page 1

AN ACT

RELATING TO CAPITAL EXPENDITURES; AMENDING THE SEVERANCE TAX

BONDING ACT TO ALLOW ISSUANCE OF SUPPLEMENTAL SEVERANCE TAX

BONDS BY THE STATE BOARD OF FINANCE FOR PUBLIC SCHOOL CAPITAL

OUTLAY AND THE HIGHEST PRIORITY INFRASTRUCTURE RENOVATION AND

EXPANSION NEEDS OF POST-SECONDARY EDUCATIONAL INSTITUTIONS;

AUTHORIZING THE ISSUANCE OF SUPPLEMENTAL SEVERANCE TAX BONDS;

MAKING AN APPROPRIATION; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 7-27-6 NMSA 1978 (being Laws 1961,

Chapter 5, Section 4) is amended to read:

"7-27-6. SEVERANCE TAX BONDING FUND PLEDGED.--

A. The money in the severance tax bonding fund is

first pledged for the payment of principal and interest on all

severance tax bonds issued after the enactment of the

Severance Tax Bonding Act.

B. The money in the severance tax bonding fund is

second pledged, on a basis subordinate to any severance tax

bonds then or thereafter outstanding, for the payment of

principal and interest on all supplemental severance tax bonds

issued after the enactment of the Severance Tax Bonding Act."

Section 2. Section 7-27-7 NMSA 1978 (being Laws 1961,

Chapter 5, Section 5) is amended to read:

"7-27-7. SPECIAL INCOME TO RETIRE BONDS.--When a law

HB 5

Page 2

authorizing a severance tax bond issue or supplemental

severance tax bond issue contemplates the income of money for

the retirement of the bond issue other than or in addition to

the money in the severance tax bonding fund, then the money

derived from such income shall be paid to the state treasurer

and be credited to the specific bond issue account and

deposited in the severance tax bonding fund."

Section 3. Section 7-27-9 NMSA 1978 (being Laws 1961,

Chapter 5, Section 7) is amended to read:

"7-27-9. BONDS TO BE KNOWN AS SEVERANCE TAX BONDS AND

SUPPLEMENTAL SEVERANCE TAX BONDS.--

A. Prior to July 1, 1999, all bonds issued wherein

the money in the severance tax bonding fund is pledged for

their retirement shall be known as "New Mexico severance tax

bonds".

B. After July 1, 1999, there shall be two

categories of bonds issued by the state board of finance

wherein the money in the severance tax bonding fund is pledged

for their retirement. Those bonds shall be known as "New

Mexico severance tax bonds" and as "New Mexico supplemental

severance tax bonds"."

Section 4. Section 7-27-10 NMSA 1978 (being Laws 1961,

Chapter 5, Section 8) is amended to read:

"7-27-10. STATE BOARD OF FINANCE SHALL ISSUE BONDS.--

A. The state board of finance is authorized to

HB 5

Page 3

issue and sell severance tax bonds within the provisions of

the Severance Tax Bonding Act, and no other agency of the

state is authorized to issue or sell severance tax bonds.

B. The state board of finance may issue and sell

supplemental severance tax bonds within the provisions of the

Severance Tax Bonding Act, and no other agency of the state is

authorized to issue or sell supplemental severance tax bonds."

Section 5. Section 7-27-11 NMSA 1978 (being Laws 1961,

Chapter 5, Section 9, as amended) is amended to read:

"7-27-11. AUTHORITY TO REFUND BONDS.--

A. The state board of finance may issue and sell

at public or private sale severance tax bonds to refund

outstanding severance tax bonds by exchange, immediate or

prospective redemption, cancellation or escrow, including the

escrow of debt service funds accumulated for payment of

outstanding bonds, or any combination thereof when, in its

opinion, such action will be beneficial to the state.

B. The state board of finance may issue and sell

at public or private sale supplemental severance tax bonds to

refund outstanding supplemental severance tax bonds by

exchange, immediate or prospective redemption, cancellation or

escrow, including the escrow of debt service funds accumulated

for payment of outstanding supplemental severance tax bonds,

or any combination thereof when, in its opinion, such action

will be beneficial to the state."

HB 5

Page 4

Section 6. Section 7-27-12 NMSA 1978 (being Laws 1961,

Chapter 5, Section 10, as amended) is amended to read:

"7-27-12. WHEN SEVERANCE TAX BONDS TO BE ISSUED.--

A. The state board of finance shall issue and sell

all severance tax bonds when authorized to do so by any law

that sets out the amount of the issue and the recipient of the

money.

B. The state board of finance shall also issue and

sell severance tax bonds authorized by Sections 72-14-36

through 72-14-42 NMSA 1978, and such authority as has been

given to the interstate stream commission to issue and sell

such bonds is transferred to the state board of finance. The

state board of finance shall issue and sell all severance tax

bonds only when so instructed by resolution of the governing

body or executive head of the recipient of the bond money.

C. Proceeds from supplemental severance tax bonds

shall be used only for public school critical capital outlay

projects pursuant to the Public School Capital Outlay Act or

for infrastructure renovation and expansion at the state's

public post-secondary educational institutions and other

institutions confirmed as state educational institutions in

Article 12, Section 11 of the constitution of New Mexico

pursuant to a plan developed and approved by the commission on

higher education to fund the highest priority significant

needs identified by the commission.

HB 5

Page 5

D. The state board of finance shall issue and sell

all supplemental severance tax bonds when authorized to do so

by any law that sets out the amount of the issue and names the

public school capital outlay council or the commission on

higher education as the recipient of the money. The state

board of finance shall issue and sell supplemental severance

tax bonds only when so instructed by resolution of the public

school capital outlay council or by resolution of the

commission on higher education pursuant to certification by

the governing bodies of the appropriate educational

institutions."

Section 7. Section 7-27-14 NMSA 1978 (being Laws 1961,

Chapter 5, Section 11) is amended to read:

"7-27-14. AMOUNT OF TAX--SECURITY FOR BONDS.--

A. The legislature shall provide for the continued

assessment, levy, collection and deposit into the severance

tax bonding fund of the tax or taxes upon natural resource

products severed and saved from the soil of the state that,

together with such other income as may be deposited to the

fund, will be sufficient to produce an amount that is at least

the amount necessary to meet annual debt service charges on

all outstanding severance tax bonds and supplemental severance

tax bonds.

B. The state board of finance shall issue no

severance tax bonds unless the aggregate amount of severance

HB 5

Page 6

tax bonds outstanding, and including the issue proposed, can

be serviced with not more than fifty percent of the annual

deposits into the severance tax bonding fund, as determined by

the deposits during the preceding fiscal year.

C. The state board of finance shall issue no

supplemental severance tax bonds unless the aggregate amount

of severance tax bonds and supplemental severance tax bonds

outstanding, and including the issue proposed, can be serviced

with not more than sixty-two and one-half percent of the

annual deposits into the severance tax bonding fund, as

determined by the deposits during the preceding fiscal year.

D. The provisions of this section shall not be

modified by the terms of any severance tax bonds or

supplemental severance tax bonds hereafter issued."

Section 8. Section 7-27-16 NMSA 1978 (being Laws 1961,

Chapter 5, Section 13, as amended) is amended to read:

"7-27-16. FORM OF BONDS.--

A. The state board of finance, except as otherwise

specifically provided in the Severance Tax Bonding Act, shall

determine at its discretion the terms, covenants and

conditions of severance tax bonds and supplemental severance

tax bonds, including but not limited to: date of issue,

denominations, maturities, rate or rates of interest, call

features, call premiums, registration, refundability and other

covenants covering the general and technical aspects of the

HB 5

Page 7

issuance of the bonds.

B. The bonds shall be in such form as the state

board of finance may determine, and successive issues shall be

identified by alphabetical, numerical or other proper series

designation."

Section 9. Section 7-27-17 NMSA 1978 (being Laws 1961,

Chapter 5, Section 14, as amended) is amended to read:

"7-27-17. EXECUTION OF BONDS.--Severance tax bonds and

supplemental severance tax bonds shall be signed and attested

by the state treasurer and shall be executed with the

facsimile signature of the governor and the facsimile seal of

the state, except for bonds issued in book entry or similar

form without the delivery of physical securities. Any

interest coupons attached to the bonds shall bear the

facsimile signature of the state treasurer, which officer, by

the execution of the bonds, shall adopt as his own signature

the facsimile thereof appearing on the coupons. Except for

bonds issued in book entry or similar form without the

delivery of physical securities, the Uniform Facsimile

Signature of Public Officials Act shall apply, and the state

board of finance shall determine the manual signature to be

affixed on the bonds."

Section 10. Section 7-27-18 NMSA 1978 (being Laws 1961,

Chapter 5, Section 15) is amended to read:

"7-27-18. PROCEDURE FOR SALE OF BONDS.--

HB 5

Page 8

A. Severance tax bonds and supplemental severance

tax bonds shall be sold by the state board of finance at such

times and in such manner as the board may elect, consistent

with the need of the board, commission or agency that is the

recipient of the bond money, to the highest bidder for cash at

not less than par and accrued interest.

B. The state board of finance shall publish a

notice of the time and place of sale in a newspaper of general

circulation in the state, and also in a recognized financial

journal outside the state. Such publication shall be made

once each week for two consecutive weeks prior to the date

fixed for such sale, the last publication to be at least ten

days prior to the date of sale. Such notice shall specify the

amount, denomination, maturity and description of the bonds to

be offered for sale and the place, day and hour at which

sealed bids therefor shall be received. All bids, except that

of the state, shall be accompanied by a deposit of two percent

of the bid price. Deposits of unsuccessful bidders shall be

returned upon rejection of the bid.

C. At the time and place specified in such notice,

the state board of finance shall open the bids in public and

shall award the bonds, or any part thereof, to the bidder or

bidders offering the best price therefor. Before delivering

any bonds sold, the state treasurer shall detach therefrom and

cancel all interest coupons which may have matured prior to

HB 5

Page 9

the date of delivery. The state board of finance may reject

any or all bids and readvertise. The state board of finance

may sell a severance tax bond or supplemental severance tax

bond issue, or any part thereof, to the state at private

sale."

Section 11. Section 7-27-19 NMSA 1978 (being Laws 1961,

Chapter 5, Section 16) is amended to read:

"7-27-19. SEVERANCE TAX BONDS AND SUPPLEMENTAL

SEVERANCE TAX BONDS LEGAL INVESTMENTS.--Severance tax bonds

and supplemental severance tax bonds are legal investments for

any person or board charged with the investment of any public

funds and are acceptable as security for any deposit of public

money."

Section 12. Section 7-27-20 NMSA 1978 (being Laws 1961,

Chapter 5, Section 17) is amended to read:

"7-27-20. EXPENSES PAID FROM SEVERANCE TAX BONDING

FUND.--The expense incurred in the issuance of severance tax

bonds and supplemental severance tax bonds shall be paid from

the severance tax bonding fund."

Section 13. Section 7-27-21 NMSA 1978 (being Laws 1961,

Chapter 5, Section 18) is amended to read:

"7-27-21. TREASURER TO MAKE BOND PAYMENTS AND KEEP

RECORDS.--Severance tax bonds and supplemental severance tax

bonds payable from the severance tax bonding fund shall be

paid by the state treasurer who shall keep a complete bond

HB 5

Page 10

register showing severance tax bonds and supplemental

severance tax bonds, coupons paid and outstanding on the bonds

and such other records as the state board of finance shall

require."

Section 14. Section 7-27-22 NMSA 1978 (being Laws 1961,

Chapter 79, Section 2, as amended) is amended to read:

"7-27-22. SEVERANCE TAX BONDING ACT TO BE FULL

AUTHORITY FOR ISSUANCE OF BONDS.--The Severance Tax Bonding

Act shall, without reference to any other act of the

legislature, be full authority for the issuance and sale of

severance tax bonds and supplemental severance tax bonds,

which bonds and the coupons attached thereto shall have all

the qualities of investment securities under the Uniform

Commercial Code and shall not be invalid for any irregularity

or defect or be contestable in the hands of bona fide

purchasers or holders thereof for value."

Section 15. Section 7-27-23 NMSA 1978 (being Laws 1961,

Chapter 5, Section 20) is amended to read:

"7-27-23. SUIT MAY BE BROUGHT TO COMPEL PERFORMANCE OF

OFFICERS.--Any holder of severance tax bonds or supplemental

severance tax bonds or any person or officer being a party in

interest may sue to enforce and compel the performance of the

provisions of the Severance Tax Bonding Act."

Section 16. Section 7-27-24 NMSA 1978 (being Laws 1961,

Chapter 5, Section 21) is amended to read:

HB 5

Page 11

"7-27-24. BONDS TAX FREE.--All severance tax bonds and

supplemental severance tax bonds shall be exempt from taxation

by the state or any of its political subdivisions."

Section 17. Section 7-27-27 NMSA 1978 (being Laws 1961,

Chapter 5, Section 27, as amended) is amended to read:

"7-27-27. PURPOSE AND INTENT.--The purpose of the

Severance Tax Bonding Act is to establish the authority who

shall issue and sell all severance tax bonds and supplemental

severance tax bonds for financing specific projects authorized

by the legislature and to guarantee redemption of such bonds

by revenue derived from the receipts from taxes levied upon

natural resource products severed and saved from the soil and

such other money as the legislature may from time to time

determine. It is intended that projects to be financed from

the fund shall include but not be limited to the construction

of buildings for state institutions and water resource

projects; and it is further intended that the income from

water resource projects in excess of the amount required for

operation and maintenance of the project shall be used to

repay the severance tax bonding fund."

Section 18. COMMISSION ON HIGHER EDUCATION--PLAN FOR

FUNDING SIGNIFICANT POST-SECONDARY EDUCATIONAL INFRASTRUCTURE

NEEDS.--

A. The commission on higher education, in

conjunction with the governing bodies of the post-secondary

HB 5

Page 12

educational institutions and other state educational

institutions confirmed in Article 12, Section 11 of the

constitution of New Mexico, shall develop and approve a five-

year plan for funding with supplemental severance tax bonds

the infrastructure renovation and expansion projects

designated by the commission as the highest priority of

significant needs. The commission shall determine the

projects and amounts to be funded, with a timetable for the

projects and amounts to be funded each year over the five-year

period, subject to review and comment by the educational

institutions and subject to the amount of supplemental

severance tax bonds issued each year.

B. The commission on higher education shall

administer the proceeds from supplemental severance tax bonds

appropriated to the commission and distribute the proceeds to

the respective governing bodies of the educational

institutions with projects that are funded with the proceeds

pursuant to the plan approved and adopted by the commission in

Subsection A of this section.

Section 19. SUPPLEMENTAL SEVERANCE TAX BONDS--PURPOSE

FOR WHICH ISSUED--APPROPRIATION OF PROCEEDS.--

A. The state board of finance may issue and sell

supplemental severance tax bonds in compliance with the

Severance Tax Bonding Act in the following amounts for the

following purposes upon the following certification:

HB 5

Page 13

(1) an amount not exceeding one hundred

million dollars ($100,000,000) when the public school capital

outlay council certifies by resolution the need for the

issuance of the bonds for public school critical capital

outlay projects pursuant to the Public School Capital Outlay

Act; and

(2) an amount not exceeding twenty-five

million dollars ($25,000,000) when the commission on higher

education certifies by resolution the need for the issuance of

the bonds for infrastructure renovation and expansion at the

state's public post-secondary educational institutions or

other educational institutions confirmed in Article 12,

Section 11 of the constitution of New Mexico pursuant to a

plan developed and approved by the commission on higher

education to fund the highest priority significant needs

identified by the commission.

B. Of the amount of supplemental severance tax

bonds issued annually, an amount equal to twenty percent of

the proceeds shall be appropriated for the purposes in

Paragraph (2) of Subsection A of this section.

C. The state board of finance shall schedule the

issuance and sale of the bonds in the most expeditious and

economical manner possible upon a finding by the board that

the projects have been developed sufficiently to justify the

issuance and that the projects can proceed to contract within

HB 5

Page 14

a reasonable time. The state board of finance shall further

take the appropriate steps necessary to comply with the

Internal Revenue Code of 1986, as amended.

D. The proceeds from the sale of the bonds

pursuant to Paragraph (1) of Subsection A of this section are

appropriated to the public school capital outlay fund to carry

out the provisions of the Public School Capital Outlay Act.

If the public school capital outlay council has not certified

the need for the issuance of the bonds by the end of fiscal

year 2004, authorization provided in this section shall

expire. Any unexpended or unencumbered balance remaining from

the proceeds of bonds issued pursuant to Paragraph (1) of

Subsection A of this section at the end of fiscal year 2006

shall revert to the severance tax bonding fund.

E. The proceeds from the sale of the bonds in

Paragraph (2) of Subsection A of this section are appropriated

to the commission on higher education for distribution to the

governing bodies of the educational institutions who have

certified projects for funding with the bond proceeds. If the

commission on higher education has not certified the need for

the issuance of the bonds by the end of fiscal year 2004,

authorization provided in this section shall expire. Any

unexpended or unencumbered balance remaining from the proceeds

of bonds issued pursuant to Paragraph (2) of Subsection A of

this section at the end of fiscal year 2006 shall revert to

the severance tax bonding fund.

Section 20. REPEAL.--Section 7-27-11.1 NMSA 1978 (being

Laws 1985 (1st S.S.), Chapter 15, Section 15) is repealed.

Section 21. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 1999.

Section 22. EMERGENCY.--It is necessary for the public

peace, health and safety that this act take effect

immediately. HB 5

Page 15