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.



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 Suite 101 of the State Capitol Building North.





F I S C A L I M P A C T R E P O R T





SPONSOR: Begaye DATE TYPED: 03/01/01 HB 683
SHORT TITLE: Motor Vehicle Insurance for Indigent SB
ANALYST: Taylor


APPROPRIATION



Appropriation Contained
Estimated Additional Impact
Recurring

or Non-Rec

Fund

Affected

FY01 FY02 FY01 FY02
$ 5,000.0 Significant Recurring General Fund



(Parenthesis ( ) Indicate Expenditure Decreases)



SOURCES OF INFORMATION



Human Services Department (HSD)

Public Regulation Commission



SUMMARY



Synopsis of Bill



House Bill 683 appropriates $5 million from the general fund to the Human Services Department to provide motor vehicle insurance for indigent persons. Program eligibility is defined to include persons who are eligible for the temporary assistance for needy families program (TANF), welfare-to-work program, workforce investment act, whose children qualify for free lunches or any other public assistance program based on income, whether or not the person is a program participant.



FISCAL IMPLICATIONS



The appropriation of $5,000.0 contained in this bill is a recurring expense to the general fund. Any unexpended or unencumbered balance remaining at the end of FY02 shall revert to the general fund.



The Human Services Department estimates that 150,000 New Mexico families would be eligible for assistance under the eligibility guidelines provided for the program. The Public Regulation Commission reports that the average insurance cost as required in the Financial Responsibility Act is $340 per car per year. Multiplying $340 times 150,000, the result is $51 million. This would be the cost of the program once it was fully implemented, assuming that all eligibles participated. In reality, participation will be less than 100 percent, but still the program would be expensive.



In addition to the cost of providing insurance, the Human Services Department reports that expected administrative costs would be about $15 million per year. This cost estimate is based upon the assumption that 429 new FTE would be needed to administer the program at a cost of $36,500 per FTE (assumption of 400 clients per caseworker plus supervisory and support staff).



HSD also reports that they would need $250.0 for reprogram their computer system.



ADMINISTRATIVE IMPLICATIONS



HSD would have to hire more caseworkers. Their estimate as to the number of staff needed may be high as it is based on an average number of cases per worker, assuming all cases are alike. In fact, some kinds of cases are easier to administer than others. Nonetheless, the administrative impact is expected to be significant.



BT/ar