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

Department of Environment

New Mexico Finance Authority

LFC Files

SUMMARY

Synopsis of SFC Amendment

Senate Finance Committee amendment to Senate Bill 541 includes a provision that provides that no money shall be appropriated from the new infrastructure fund unless the recipient of the appropriation has identified the source of revenue that will be used to maintain and operate the capital project.

Synopsis of Bill

Senate Bill 541 creates a permanent legislative capital council and establishes its duties. The bill also creates an infrastructure fund to receive distributions into the fund from tobacco settlement money and motor vehicle excise taxes.

Significant Issues

Senate Bill 541 creates a legislative capital council made up of eight (8) members, four members from each house including the designation of a chairman and vice-chairman, appointed by the Legislative Council. Members of the council shall be proportional to major parties' share of seats. The capital council, by majority vote of both the capital and legislative councils, may create sub-committees to assist in carrying out the duties of the capital council.

The purpose and duties of the capital council is to develop and implement a process for recommending projects; identifying long-term capital needs and coordinating such needs with the assistance of other governmental entities; developing a process to prioritize projects and annual recommendations to the legislature; determining the dollars available for capital financing; making recommendations for additional funding, if necessary; and reporting its findings to the Legislative Council and the legislature.

The bill creates a legislative infrastructure fund to receive distributions from tobacco settlement money and motor vehicle excise taxes. Distribution from the tobacco settlement is 25% of annual distribution to the state, approximately $10 million annually. Distribution from motor vehicle excise tax is phased in over three years. The redirection of the motor vehicle excise tax phased over three years would minimize the impact on the general fund. Based on general fund revenue estimates, the distributions from the motor vehicle excise tax to the infrastructure fund would be $33 million in FY2001, $69 million in FY2002, and $108 million in FY2003. After the third year, all motor vehicle tax is distributed to the infrastructure fund. Income earned from investment of the fund shall accrue and money available in the fund will be available for appropriation by the legislature for any capital purpose.

This would enable the legislature to finance $250 million in FY2001, $280 million in FY 2002, and $300 million in FY 2003, assuming 10-year bonds and a five percent interest rate. Details on structuring the bonds would have to be developed with a state financing agency, perhaps the New Mexico Finance Authority.

FISCAL IMPLICATIONS

Although Senate Bill 541 does not have an appropriation, there is no indication of how council and subcommittee members would be reimbursed for per diem and mileage.

OTHER SUBSTANTIVE ISSUES

A current review of the financial accounting and activity status of capital outlay projects appropriated in the last ten years indicates that there are unexpended balances dating back to 1983; repetitive reauthorizations are made without justification of delays; and unexpended balances total approximately $250 million.

Although not totally in effect, the provisions of Senate Bill 541 are similar to the statutory provisions contained in the New Mexico Finance Authority Act which reads as follows:

"It is the purpose of the New Mexico Finance Authority Act, 6-21-1 to 6-21-29 NMSA 1978, to create a governmental instrumentality to coordinate the planning and financing of state and local public projects, to provide for long-term planning and assessment of state and local capital needs and to improve cooperation among the executive and legislative branches of state government and local governments in financing public projects."

The NMFA has also been statutorily granted the necessary authority to issue and sell bonds and the structure of the funding mechanism considered by Senate Bill 541 currently exists within the current NMFA organization. The NMFA has stated that they are willing to assist in the Legislature's endeavor to improve the state's infrastructure funding mechanism.

POSSIBLE QUESTIONS

• •The bill provides that the council "determine annually the amount of money and bonding capacity available from all state and local sources for funding of capital projects." Should the infrastructure fund created by Senate Bill 541 include Severance Tax Bond and GO capacity?

LMK/gm:njw