SENATE JOINT MEMORIAL 38

48th legislature - STATE OF NEW MEXICO - second session, 2008

INTRODUCED BY

John Arthur Smith

A JOINT MEMORIAL

REQUESTING THE NEW MEXICO LEGISLATIVE COUNCIL TO DIRECT THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE TO STUDY MUNICIPAL AND COUNTY FRANCHISE FEES.

     WHEREAS, Sections 3-42-1 and 3-42-2 NMSA 1978 authorize municipalities in New Mexico to enter into franchise agreements for the purpose of construction and operation of a public utility; and

     WHEREAS, Section 62-1-3 NMSA 1978 authorizes counties in New Mexico to enter into franchise agreements to permit public utilities to use public highways and streets to locate various fixtures, appliances and structures; and

     WHEREAS, municipalities are permitted to charge a reasonable franchise fee as compensation for the use of the public streets and rights of way by public utilities; and

     WHEREAS, counties have been prohibited by opinions of the attorney general of New Mexico and a court decision from charging a reasonable franchise fee as compensation for the use of public streets and rights of way by public utilities; and

     WHEREAS, Article 9, Section 14 of the constitution of New Mexico, known as the anti-donation clause, provides in part that counties and other governmental units and entities shall not directly or indirectly make any donation to or in aid of any person, association or public or private corporation; and

     WHEREAS, the New Mexico court of appeals recently issued its opinion in State of New Mexico ex rel Madrid v. UU Bar Ranch Ltd Partnership, 137 N.M. 719, 114 P.3d 399, in which the court ruled that public rights of way are interests in real property and thus subject to the provisions of New Mexico statutes preventing disposition of public rights of way without first complying with statutory requirements for the disposition of interests in real property; and

     WHEREAS, the use of public rights of way by public utility companies without the payment of a reasonable fee constitutes a disposition of an interest in real property and violates the anti-donation clause of the constitution of New Mexico; and

     WHEREAS, the public utility companies of New Mexico have embarked on a tactic to delay the negotiation and implementation of new franchise agreements with various counties and municipalities; and

     WHEREAS, the appropriate resolution of the issues surrounding the negotiation of franchise fees may be replacement of the negotiation process with the granting of statutory authority for municipalities and counties to impose reasonable franchise fees or a franchise tax;

     NOW, THEREFORE, BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO that the New Mexico legislative council direct the revenue stabilization and tax policy committee to study the issues raised by the current franchise fee provisions and make recommendations for appropriate and equitable legislation establishing statutory franchise fees or authorizing imposition by municipalities and counties of a franchise tax; and

     BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the co-chairs of the New Mexico legislative council, the public regulation commission, the New Mexico association of counties and the New Mexico municipal league.

- 3 -