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 Expenditure Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

New Mexico Mortgage Authority and LFC Files.

SUMMARY

Synopsis of HTRC Amendment

House Taxation and Revenue Committee amendments to Senate Bill 46/a, further amends the bill to authorize the New Mexico Finance Authority to make loans to three additional entities and projects including: 1) Abiquiu mutual domestic water and sewer association for a wastewater project; 2) City of Deming for a solid waste project and a utility project; and 3) City of Clovis for a public works administration building and related facilities.

Synopsis of SFC Amendment

The Senate Finance Committee amendment to Senate Bill 46/a authorizes the New Mexico Finance Authority to make loans to eight (8) additional governmental entities and projects including: 1) Carrizozo for a building project; 2) El Rito mutual domestic water consumers association for a water project; 3) City of Las Vegas for street and water projects; 4) City of Lovington for land acquisition and improvement; 5) McKinley County for a refinancing project; 6) Rio Rancho for land acquisition and improvement project and a road equipment project; 7) Town of Silver City for a wastewater project; and 8) Curry County, Roosevelt County, Quay County, City of Clovis, City of Texico, Village of Melrose, Village of Grady, City of Portales, Town of Elida, City of Tucumcari, Village of San Jon, Village of Logan or any other qualified entity consisting of the majority of those towns listed for planning and design of the Ute water development project.

Synopsis of SPAC Amendment

Senate Public Affairs Committee amendment to Senate Bill 46 deletes legislative authority for the New Mexico Finance Authority (NMFA) to make a loan "to the Department of Health for a building project." The amendment further authorizes the Authority to make a loan to the Santa Fe Indian School, Inc., a nonprofit corporation organized under the laws of the State of New Mexico, for a building project.

The request from the Department of Health for a building project at the Las Vegas Medical Center in Las Vegas, New Mexico was officially withdrawn. The Santa Fe Indian School, Inc. is a qualified entity, as defined in the New Mexico Finance Authority Act, to borrow from the Public Revolving Loan Fund if approved by the Authority.

Synopsis of Bill

Senate Bill 46 authorizes the New Mexico Finance Authority (NMFA) to provide loans from the Public Project Revolving Fund for 120 statewide capital outlay projects.

Significant Issues

The New Mexico Finance Authority Act requires specific authorization by the legislature for capital loans made by the NMFA to state institutions, counties, municipalities, school districts, community water associations, rural primary health care centers, non-profit entities, and Indian nations, tribes or pueblos in New Mexico.

The passage of Senate Bill 46 does not guarantee that all projects will receive a loan. Loans will only be made to those projects that can identify a repayment source and meet other financial criteria established by the Authority. If projects are authorized for loans by the legislature, and financial criteria is met, local governmental entities may borrow for infrastructure projects at below market costs, based on terms and conditions established by the NMFA. If an NMFA loan is not sufficient to fund the complete costs of a project, applicants may be required to reduce the proposed project cost and/or identify other reliable sources of funding or pledged revenue to cover costs beyond the loan.

Section 2 of the bill requires that entities listed in the bill certify to the Authority by the end of FY2003 that they desire to obtain a loan from the public project revolving loan fund. If the Authority does not receive certification by such time, the legislative authority will be considered void.

FISCAL IMPLICATIONS

There is no fiscal impact to the general fund. The infrastructure projects are financed from the NMFA's Public Project Revolving Fund that receives an annual distribution of 75 percent of the Governmental Gross Receipts Tax, approximately $12 million annually.

ADMINISTRATIVE IMPLICATIONS

The NMFA is a government instrumentality rather than a state agency and does not require FTE or general fund appropriations to administer programs.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

Although none have been identified at this time, some governmental entities may approach the Legislature for capital outlay funds for all or portions of their project, in separate bills or capital outlay requests.

POSSIBLE QUESTIONS

1. What has NMFA done to actively encourage and assist governmental entities in pursuing other subsidized funding if NMFA financial criteria cannot be met?

2. There are 120 projects in Senate Bill 46, on the average, how many will meet the NMFA loan criteria?

3. What is the present loan capacity of the Public Project Revolving Fund?

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