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Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

New Mexico Finance Authority

LFC Files

SUMMARY

Synopsis of HTRC Amendment

House Taxation and Revenue Committee amendment to House Bill 18 requires that limited permanent loans may be in the interim "with the concurrence of the New Mexico Finance Authority Oversight Committee."

Synopsis of Bill

House Bill 18 amends the New Mexico Finance Authority Act (NMFA) to allow the Authority to make a limited number of permanent equipment loans from the Public Project Revolving Fund. The bill limits the dollar value of individual equipment loans to $500,000 and limits the aggregate dollar value of all such loans to $3,000,000 per fiscal year.

Significant Issues

The NMFA equipment program is statutorily defined to finance loans for the acquisition of equipment for fire protection; law enforcement and protection; computer and data processing; street and road construction and maintenance; emergency medical equipment; solid waste collection, transfer and disposal; radio and telecommunications; and utility system purposes, and to finance the acquisition, construction and improvement of fire stations. The majority of equipment loans made by the NMFA are small loans for fire trucks, police cars, sanitation equipment and related purposes. Because the loans are small, the cost of issuance and lack of ratings drive interest costs to a high level.

The Finance Authority currently has authority to make loans in the interim between sessions from the Public Project Revolving Fund for the equipment program as long as the amount of the loan to a qualified entity so long as it does not exceed $500,000 and so long as permanent financing is obtained within one year. Interim financing has made the program more accessible for small communities, but permanent financing has been relatively expensive in some cases, since permanent financing has to be obtained outside of the public project revolving fund.

FISCAL IMPLICATIONS

Loans would be made from the Public Project Revolving Fund which receives an annual distribution of 75 percent of the governmental gross receipts tax which is approximately $12 million annually. There would be no impact to the general fund.

LMK/prr