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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(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

New Mexico Finance Authority (NMFA)

SUMMARY

Synopsis of Bill

Senate Bill 662 creates a water and wastewater project grant fund within the New Mexico Finance Authority and provides for grants for water and wastewater projects.

Significant Issues

Senate Bill 662 authorizes the NMFA to issue revenue bonds payable from the Public Project Revolving Fund for the Water and Wastewater Project Grant Fund. The new fund would consist of the net proceeds of the sale of bonds authorized by law and payable from the governmental gross receipts tax and may also receive money appropriated by the legislature and any other public or private money that may be dedicated to the fund. The bill further provides that the NMFA be required to make grants as part of a complete project financing and to adopt rules and regulations regarding local match requirements. Local matches would be based on a sliding scale based on the ability of the qualified entity to repay a loan.

Currently, thirty-five percent of the governmental gross receipts tax proceeds from the Public Project Revolving Fund may be used in the issuance of bonds or may be available for appropriation after all debt service charges have been satisfied to the Wastewater Facility Construction Loan Fund, the Rural Infrastructure Revolving Loan Fund, the solid Waste Facility Grant Fund, and the Drinking Water State Revolving Loan Fund. The proposed Water and Wastewater Project Grant Fund simply adds another purpose for which funds may be appropriated.

According to the NMFA, the proposed Water and Wastewater Facility Grant Fund would be created outside the Public Project Revolving Fund and the new fund would not reduce the capacity of the NMFA to make loans from the Public Project Revolving Fund to qualified entities. It simply provides a separate fund from which the Authority may make grants to entities which could not afford to repay a loan.

FISCAL IMPLICATIONS

Senate Bill 662 has no impact on the general fund and will not require additional FTE for the NMFA to administer the proposed new fund.

ADMINISTRATIVE IMPLICATIONS

Senate Bill 662 authorizes the NMFA to adopt the procedures required to administer the new grant fund, but producing such procedures will have a minimal impact on the NMFA's existing staff.

LMK/prr