Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC 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 Campos

DATE TYPED 2/14/05

HB

SHORT TITLE State Deposits for Economic Development

SB 17

ANALYST Hadwiger

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

Indeterminate

Indeterminate Recurring

General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

State Investment Council (SIC)

Economic Development Department (EDD)

SUMMARY

Synopsis of Bill

Senate Bill 17 would allow the New Mexico Board of Finance (BOF) to require a bank, savings

and loan association or credit union that receives state deposits to earmark a percentage of the

deposits for stimulating economic development in the New Mexico community in which the fi-

nancial institution has its main office.

Significant Issues

The Economic Development Department indicated that SB17 would provide additional opportu-

nities for local banks to assist in economic development initiatives in the community. Financial

institutions that are risk adverse may leverage these funds to reduce risk and thus provide debt

financing to small businesses that with financial assistance to grow their businesses and create

new jobs.

Senate Bill 17 -- Page 2

The Department of Finance and Administration noted that SB17 is directed toward the State

Treasurer's certificate of deposit program, in which financial institutions’ certificates of deposits

are processed by the State Treasurer and public monies are deposited with the bank. This bill

would allow the BOF to mandate a portion of public money on deposit with the financial institu-

tions be used in the bank loan portfolio for economic development purposes in the local commu-

nity. The State Investment Council indicated that at the present, these institutions are already

investing public monies back in the communities they serve, taking public monies and making

loans to their constituents in the form of consumer, commercial and real estate loans.

FISCAL IMPLICATIONS

Possible impact on revenues would be contingent upon the performance of investments of public

funds pursuant to SB17.

ADMINISTRATIVE IMPLICATIONS

The BOF would have to implement a policy in coordination with the State Treasurer to regulate

this program.

DH/yr