44TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 1999

REQUESTING THE STATE INVESTMENT COUNCIL TO OFFER INFORMATION AND IF REQUESTED, OPEN A DIALOGUE WITH MEMBERS OF OTHER STATES AND THE FEDERAL GOVERNMENT RELATING TO NEW MEXICO'S SUCCESS IN LONG-TERM INVESTMENT STRATEGIES.

WHEREAS, the congress of the United States transferred thirteen million four hundred thousand acres to the territory of New Mexico under the Fergusson Act of 1898 and the Federal Enabling Act of 1910 in anticipation of statehood; and

WHEREAS, these lands are held in trust for the benefit of the public schools and nineteen other specifically identified state institutions; and

WHEREAS, the trust lands are administered by the state land office, and the non-renewable revenues from the trust lands have become the land grant permanent fund; and

WHEREAS, from the inception of the trust until 1976, the royalties and land sales from the trust lands amassed over six hundred fifty million dollars ($650,000,000) in the land grant permanent fund; and

WHEREAS, in 1976 the citizens of New Mexico dedicated one-half of the state severance tax revenues to a severance tax permanent fund, to be administered by the state investment council; and

WHEREAS, the combined land grant and severance tax permanent funds now total over eleven billion dollars ($11,000,000,000); and

WHEREAS, corporate stocks and bonds, mortgage-backed securities and asset-backed securities have historically been part of both funds's portfolios under cautious statutory requirements; and

WHEREAS, in 1996 the citizens of New Mexico approved a constitutional amendment that modernized the management practices of the funds and allowed restructuring and investment comparable to other professionally managed endowment funds; and

WHEREAS, in fiscal year 1998, the total rate of return on the permanent funds was twenty-one and five-tenths percent, which increased the value of the funds by one billion seven hundred million dollars ($1,700,000,000); and

WHEREAS, over the last ten years, the permanent funds' total return on equities was nineteen and three-tenths percent per year and the total return on fixed income was nine and six-tenths percent per year; and

WHEREAS, New Mexico's two permanent funds have become a model for a number of other states with permanent funds that are revising their constitutional and statutory restrictions based on New Mexico's example; and

WHEREAS, the president of the United States and the congress have expressed a desire to diversify the social security trust fund and improve the rate of return through expanded investment in the private sector; and

WHEREAS, New Mexico's experience and long-term investment strategy may serve as a model for other states or the federal government;

NOW, THEREFORE, BE IT RESOLVED BY THE HOUSE OF REPRESENTATIVES OF THE STATE OF NEW MEXICO that the state investment council and staff offer information and if requested open a dialogue on long-term investment strategy with members of other states or members of the federal government; and

BE IT FURTHER RESOLVED that copies of this memorial be distributed to the members of the New Mexico congressional delegation and to the state investment council.