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.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(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 only for health care programs in low income rural communities.

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.

In the longer term, the tobacco settlement income fund could expect to receive a regular distribution from the permanent fund beginning in FY 2001. The first distribution from the income will be relatively small, approximately $2.5 million in FY 2001, but the distributions will grow over time. The gain shown in the table for the permanent fund assumes that all money from the settlements becomes available in FY 2001, and is transferred to that fund. The loss shown to the general fund is hypothetical in the sense that absent legislation redirecting the money, will automatically flow to the general fund.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

House Bill 501,525, Senate Bills 427, 515, and 533 make other proposals for the use of tobacco money.

BT/gm