3NOTE: 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.

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(Parenthesis ( ) Indicate Expenditure Decreases)

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

New Mexico Finance Authority

Legislative Finance Committee Files

SUMMARY

Synopsis of SJC Amendment

Senate Judiciary Committee amendment to Senate Bill 80 adds a requirement in Section 6-21-21 NMSA 1978 that requires the NMFA to include in its annual report to the governor and legislature a complete list of qualified entities that requested loans from the public project revolving fund during the preceding year whose requests were denied because the qualified entities lacked sufficient resources to repay a loan.

Synopsis of Bill

Senate Bill 80 amends the New Mexico Finance Authority Act to remove the ability of the New Mexico Finance Authority to make "grants" from the Public Project Revolving Fund (PPRF). The Authority's power to make grants from other sources of funds is preserved in the bill, provided that the grants are not made from the Public Project Revolving Fund. The New Mexico Finance Authority Act has further been amended to include a statement of the Authority's statement of policy regarding grants from the PPRF. The statement clarifies that projects will not be funded from the Public Project Revolving Fund without contemporaneously pledged revenues that would be sufficient to avoid any negative impact on the financing capacity of the fund.

     Significant Issues

The NMFA's primary source of financial assistance is the Infrastructure/Equipment Finance Program for projects specifically authorized by the Legislature. The infrastructure projects are financed from the PPRF that receives an annual distribution of 75 percent of the governmental gross receipts tax.

The legislature has authorized the NMFA to make loans for more than 100 different projects totaling $163.5 million over the past four years. For the 1999 Session, Senate Bill 46 proposes to authorize the NMFA to make loans for an additional 120 projects totaling $117.9 million. The NMFA's total outstanding authorized projects totals $281.4 million which is roughly equal to the NMFA's lending capacity.

According to the Authority, making "grants" from the Public Project Revolving Fund could have a negative effect on the fund's loan capacity since a revenue source would not be available to replenish funds distributed as grants.

FISCAL IMPLICATIONS

Senate Bill 80 has no impact on the general fund. Enactment of the bill will have a positive impact on the capacity of the Public Project Revolving Fund which allows the NMFA to make loans for public projects throughout the state that may otherwise have to be funded from the general fund.

LMK/njw