Master FIR (1988)

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.

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F I S C A L I M P A C T R E P O R T

SPONSOR:	Carraro		DATE TYPED:	3-14-99		HB
SHORT TITLE:		Tobacco Settlement Trust & Income Fund				SB	427
					ANALYST:		Taylor

REVENUE

Estimated Revenue		Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
FY99	FY2000	Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
NFI	(Uncertain)	(Uncertain)	Recurring	G.F.
NFI	Uncertain	Uncertain	Recurring	Tobacco Trust
NFI	Uncertain	Uncertain	Recurring	Tobacco Income

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to HB-501, HB-525, HB-827, SB-515 and SB-533

SOURCES OF INFORMATION

Health Policy Commission

NM Attorney General Reports

LFC Files

SUMMARY

Synopsis of Bill

Senate Bill 427 provides a plan for the use of the tobacco money resulting from the settlement reached between the states' attorney 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 fund and provides that the fund will receive an annual distribution from the tobacco settlement fund. The distribution is the interest earnings made by the fund. Money in the fund is earmarked for public school capital outlay purposes.

FISCAL IMPLICATIONS

There are quite possibly 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 LFC 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 table at the top of page one shows a loss to the general fund. However, the loss is hypothetical in the sense that absent legislation directing otherwise, tobacco settlement money automatically flows to the general fund. After money is received in the trust fund, money will flow to the income fund in the following year. However, these revenues to the income fund will ramp up slowly as only the interest earnings will flow to the fund.

BT/njw