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.

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(Parenthesis ( ) Indicate Expenditure Decreases)

Companion to SB-636 Conflicts with HB 2, 3, 4, 6, 7/HAFCS and 263, and SB 2

SOURCES OF INFORMATION

LFC Files

Attorney General (AG)

Public Defender Department (PDD)

Department of Public Safety (DPS)

Public Regulation Commission (PRC)

SUMMARY

Synopsis of SFl#1 Amendment

This Senate Floor amendment strikes on page 2, line 12 "seven" and inserts "six".

Synopsis of SPAC Amendment

SB 658, as amended by the Senate Public Affairs Committee strikes out on page 1, line 13, "PROVIDING FOR SUPPLEMENTAL DISTRIBUTIONS TO FIRE DEPARTMENTS AND DISTRICTS" in the title. Replaces the word "may" with "shall" on page two, line 20. Also, on pages 2, 3 and 4 strikes Section 3 related to "Distribution of Insurance Department Collections" in its entirety. On pages 10, 11 and 12 strikes Sections 12 "Distribution of Fire Protection Fund", Section 13 "Appropriation from the State Treasury" and Section 14 "Supplemental Distribution" in their entirety. Finally, renumbers sections to correspond with the amendments.

In effect, the SPAC amendments would make the bill revenue neutral such that there would be no impact on the general fund. The SPAC amendments to SB 658 would provide for the transfer of the State Fire Marshall and the Firefighter Training Academy from the Public Regulation Commission's Insurance Division to the Department of Public Safety. The budgets and related materials of both the Fire Marshal and the Academy would all be transferred. Currently, in both SB2 and HB2, the General Appropriations Acts for FY2000, the combined budget for both entities would be $1,587.6 in fire protection fund.

Synopsis of Bill

SB 658 transfers the State Fire Marshal and the Firefighter Training Academy to the Department of Public Safety (DPS). Also, SB 658 proposes to amend the Fire Protection Fund allocation and places that responsibility under the secretary of the Department of Public Safety.

The Public Regulatory Commission (PRC) reports:

Current Distribution. Currently all money received by the Insurance Division of the PRC for fees, licences, penalties and taxes are deposited in the Insurance Department Suspense Fund ("Suspense Fund"). After refunds of money erroneously paid, at the end of each month one hundred percent of the money derived from property and vehicle insurance business is transferred from the Suspense Fund to the Fire Protection Fund and the money derived from all other kinds of insurance business is transferred from the Suspense Fund to the General Fund. Then, at the end of the fiscal year, a portion of the money in the Fire Protection Fund is distributed to municipal and county fire districts pursuant to the Fire Protection Fund Act. Other portions of the Fire Protection Fund are appropriated to the Fire Marshal's office and the Firefighter Training Academy's budget, and to the Volunteer Firefighters' Retirement Fund. The remaining balance in the Fire Protection Fund Reverts to the General Fund.

Distribution Under SB 658. PRC reports just like the current distribution, all money received by the Insurance Division of the PRC for fees, licenses, penalties and taxes would be deposited in the Suspense Fund. Also, just like the current distribution, all refunds of money erroneously paid would be subtracted from the Suspense Fund. However, under SB 658, 50% of the monthly balance remaining in the Suspense Fund that is derived from the property and insurance business would be transferred to the Fire Protection Fund and the remaining 50% monthly balance in the Suspense Fund that is derived from the property and vehicle insurance business along with all of the money in the Suspense Fund derived from all other kinds of insurance business would be transferred to the General Fund.

Another difference is that under SB 658, all money remaining in the Fire Protection Fund after the distributions to, the municipal and county fire districts, the budgets of the State Fire Marshal Bureau and the Firefighters Training Academy, and the Volunteer Firefighters Retirement Fund, would not revert at the end of the fiscal year to the General Fund but would remain in the Fire Protection fund for distribution in subsequent years. The non-reverting fund distribution in subsequent years would be used to improve fire department and fire district ratings, foster long-range planning goals, augment the annual distribution, or for any other purpose allowed by the Fire Protection Fund Law. The Fire Marshal would be required to promulgate rules to specify the purpose of that year's distribution. The Fire Marshal would also be allowed to amend the rules annually to change the purpose of the year's distribution.

Significant Issues

The position "state fire marshal" is created as the director of the State Fire Marshal Division of the Department of Public Safety. SB 658 increases DPS from five to seven program divisions. This bill does not address any office space or support staff, which will be needed. It is assumed existing facilities, whether state owned or rented, will continue to be occupied by the State Fire Marshal and are part of the FY00 Appropriation.

The Attorney General's Office questions:

1. Whether it is possible to transfer a state agency from the public regulatory commission, which is independently elected and not directly controlled by the governor, to an agency which is specified as a cabinet agency under the direct authority of the governor.

2. Whether the impact on the general fund from the funds proposed transfer is warranted.

FISCAL IMPLICATIONS

Following the SPAC amendments to SB658, the budgets and related materials of both the Fire Marshal and the Academy would all be transferred to the Department of Public Safety. Currently, in both SB2 and HB2, the General Appropriations Acts for FY2000, the combined budget for both entities would be $1,587.6 in fire protection fund. This amount in fire protection fund would be transferred to DPS in FY2000.

The LFC estimated impact before the amendment used projected estimates of fiscal year 2000 balances in the insurance suspense fund to arrive at a negative impact estimate to the general fund (reversions) of $1171.1. That amount is likely to grow in subsequent fiscal years. The PRC estimate was based on fiscal year 1998 figures and reports SB 658 has the net effect of $1120.2 not reverting to the general fund.

DPS reports effective July 1, 1999, all personnel and all money, appropriations, records, equipment, furniture, supplies and other property belonging to the State Fire Marshal Bureau and the Firefighter Training Academy of the Public Regulation Commission would be transferred to the State Fire Marshal Division and the Firefighter Training Academy of the Department of Public Safety.

PRC reports SB 658 would transfer on July 1, 1999, all existing contract and other obligations of the State Fire Marshal Bureau and Firefighter Training Academy of the PRC to the State Fire Marshal Division and the Firefighter Training Academy of DPS. New contracts may be required. In addition, SB 658 would make all rules promulgated for the State Fire Marshal Bureau and the Firefighter Training Academy of the PRC binding on the State Fire Marshal Division and Firefighter Training Academy of DPS.

ADMINISTRATIVE IMPLICATIONS

The State Fire Marshall's Office will become a Division under the Department of Public Safety. This will involve the transfer of 27 FTE. The Public Regulation Commission, provides legal services and administrative support to the State Fire Marshall's Office and Firefighter Training Academy. The administrative support positions and/or funding for this support should be transferred to DPS. DPS has within the last seven months absorbed NM Crime Stoppers, Motor Transportation Division and also received a large increase in the number of commissioned officers in the State Police Division.

DPS reports the Office of Legal Affairs, staffed with three attorneys is incapable of providing adequate legal representation to DPS at this juncture. The State Fire Marshall's Office will bring administrative actions and an area of responsibility that has previously been unknown to both this office and this Agency. It is estimated that at least one additional attorney will be necessary to meet this task.

The DPS, Administrative Services Division and Technical and Emergency Support Division will assume the additional support responsibilities currently provided by the Public Regulation Commission, Administrative Services Division. It is anticipated that the Department of Public Safety will require six additional permanent FTE.

The FTE breakdown is as follows:

The Administrative Services Division will require the following 5 FTE

Legal Staff Attorney $ 64.2

Budget Analyst III 44.4

Procurement Specialist 37.1

Financial Specialist III 36.8

Human Resource Specialist 35.5

The Technical and Emergency Support Division will require the following FTE

IS Network Administrator II 61.3

Total $279.3

Of this cost, $25.2 is nonrecurring. Possible funding sources for the additional administrative support FTE is the General Fund or an assessment to the Fire Protection Fund. HAFC/H 2, 3, 4, 6, 7 and 263, page 53, line 15 appropriates two hundred fifty thousand dollars ($250,000) from the Fire Protection Fund to the Administrative Services Division of the Public Regulation Commission. It is assumed the appropriation is intended to provide administrative support to the State Fire Marshall and Firefighter Training Academy.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

Companionship to SB-636

Conflicts with HAFC Substitute for House Bill 2, 3, 4, 6, 7 and 263 (Appropriation is to Public Regulation Commission)

Conflicts with Senate Bill 2 (Appropriation to Public Regulation Commission)

TECHNICAL ISSUES

On page 2, lines 10 through 12, the language states "The department shall be a cabinet department and shall consists of, but not limited to, seven program divisions and one administrative division…". It should read six program divisions and one administrative division, as the department does not plan to make the Firefighter Training Academy a separate division.

OTHER SUBSTANTIVE ISSUES

According to DPS, the most substantive issues are the move of the Fire Marshall's Office under the DPS and the abolishment of the State Fire Board and its replacement with the Secretary of Public Safety. Additionally, it is assumed that the Division Director for the Fire Marshall's Office will become an exempt appointee under the Department of Public Safety, in accordance with Section 9-19-6, NMSA 1978.

LAT/JBE/RAE/gm

Attachment