NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

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(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

Health Policy Commission

NM Attorney General Reports

LFC Files

SUMMARY

Synopsis of Bill

House Bill 501 provides a plan for the use of the money resulting from the settlement reached between the states' attorneys general and the tobacco industry. The bill establishes the following:

• •It creates a tobacco settlement permanent fund to receive moneys that will flow from the tobacco settlement. The fund is to be managed by the State Investment Council in the same way that it manages the Land Grant Permanent Fund.

• •It creates a tobacco settlement income fund and provides that the fund will receive an annual distribution from the tobacco settlement permanent fund. The distribution is set equal to 4.7 percent of the average value of the fund during the preceding two years. Money from the income fund is to be appropriated by the legislature for health and education programs beginning in FY 2001.



• •It creates a joint legislative tobacco settlement committee made up of six members; three members from the house and three from the senate with proportional representation from the two major political parties. The committee will meet until December 1, 1999 to develop a plan for tobacco settlement dollars. It will study how much money is likely to be received; the impact of distributing only the earnings of the permanent fund; the health and educational needs of the state that might be addressed with tobacco settlement money. It will develop guidelines for prioritizing among competing demands on the money, and it will make a recommendation to the full legislature.

FISCAL IMPLICATIONS

There would seem to be no immediate fiscal impacts for this legislation. While, the state is slated to receive a $14 million settlement payment this fiscal year and $38 million in FY 2000, there is some uncertainty as to when those payments will actually be received. The NM attorney general's office has reported to staff that the uncertainty results from legal issues in the settlement that could delay final approval of the settlement until at least 80 percent of the settling states, representing 80 percent of the dollars included in the settlement, have achieved "state specific" finality. This might happen soon or it may be delayed until the end of FY 2000.

The long-term impacts of the bill are also uncertain because although the bill establishes a permanent fund and a process for distributing some of the earning from that fund to an income fund for appropriations by the legislature, it also calls for the establishment of an interim committee to develop plans for the use of the money. Among other things, the committee will look at the impact of spending only the distributions from the permanent fund.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

House Bill 525, Senate Bills 427, 515, and 533 make other proposals for the use of tobacco money.

BT/njw