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

SPONSOR Campos

ORIGINAL DATE

LAST UPDATED

2-3-07

HB 440

SHORT TITLE Solid Waste Facility Grant

SB

ANALYST Aubel

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$5,000.0

Non-Rec

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

$5,000.0

Non-Recurring

Solid Waste

Facility Grant

Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Environment Department (NMED)

New Mexico Finance Authority (NMFA)

SUMMARY

Synopsis of Bill

House Bill 440 appropriates $5.0 million from the general fund to the solid waste facility grant

fund for expenditure in fiscal year 2008 and subsequent fiscal years to carry out the purpose of

the fund.

House Bill 440 – Page

2

FISCAL IMPLICATIONS

The appropriation of $5.0 million contained in this bill is a non-recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of FY08 shall not revert

to the general fund.

SIGNIFICANT ISSUES

The solid waste facility grant fund was created in 1995 by Section 74-9-41 NMSA 1978 to

provide grant funding for needed construction, modification, or development of solid waste

disposal and recycling facilities for qualified county and municipal applicants. The fund was

originally “seeded" with $10.0 million from finance authority revenue bonds.

According to NMFA, the solid waste facility grant fund has expended its funding on projects

throughout the state. NMED further details that this grant fund has not been replenished since

1996 and that the current remaining balance of $825,509 is committed by contract.

NMED reports that demand for this grant-funding source remains strong. In 2002, the NMED

Solid Waste Bureau received 40 applications totaling $11.0 million at a time when only $1.4

million was available for that purpose, leaving approximately 20 projects for $9.0 million

unfunded.

NMFA reports that a survey of facility operators and owners was undertaken in 2006 and the

respondents reported that if a grant opportunity were available, they would collectively apply for

$18.5 million for solid waste infrastructure expenditures.

House Bill 440 would replenish the depleted solid waste facility grant fund for funding a variety

of solid waste, diversion, recycling, program improvement and construction projects.

PERFORMANCE IMPLICATIONS

NMED maintains that HB 440 would enable NMED to perform its job better because more

money would be available to communities to bring their landfills into compliance with the law.

ADMINISTRATIVE IMPLICATIONS

NMED states that previous grant implementation procedures would continue to be followed.

Oversight of this program involves NMED’s Solid Waste Bureau and NMED’s Construction

Programs Bureau. The former manages the solicitation, review, prioritization, awarding, and

funding amounts of the grants. The latter oversees the grant once it is awarded, including

supervision of the procurement of professional services, review of plans and specifications for

the bidding and construction phases, oversight of construction, and the project closure.

OTHER SUBSTANTIVE ISSUES

Previously awarded grants made it possible to close 22 landfills, which resulted in the protection

of precious groundwater, the construction of 12 transfer stations to promote cost effective

disposal of waste, and the building or modification of 11 convenience centers to reduce illegal

dumping statewide.

House Bill 440 – Page

3

Many communities across the state hope to implement waste diversion, recycling or composting

alternatives to dispose of waste in a more cost-efficient manner in accordance with the directives

of the Solid Waste Management Act. NMED states that the reality for many communities is that

without a grant-funding source, these programs cannot be implemented.

Other municipalities must close their outdated, unlined landfills in order to decrease potential

groundwater contamination. Numerous counties, cities, towns and villages need to replace old,

inefficient solid waste collection and processing equipment or need to add a new transfer station

or convenience station. Both NMED and NMFA point to the solid waste facility grant fund

program as a proven, productive method to meet these needs.

ALTERNATIVES

Direct appropriation or debt financing may provide options to communities to meet their solid

waste needs.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Failing to capitalize this fund may negatively impact many communities and counties, especially

small municipalities with limited resources to manage solid waste properly. Communities across

the state face increasing pressure to make system improvements and/or construct new facilities.

Many are struggling economically to properly address their solid waste management obligations

and responsibilities.

POSSIBLE QUESTIONS

1.

Is $5.0 million sufficient in the face of demand.

2.

What uncommitted balance remains in the clean water state revolving loan fund.

3.

Could these grants be tied to a requirement for a portion of the project to be funded by a

loan from the clean water state revolving loan fund.

4.

As part of the approval process, can such grants include language requiring provision for

septage disposal at solid waste facilities to reduce illegal dumping.

5.

Does this program incorporate a state-wide project prioritization process and any fund

leveraging opportunities to maximize the dollars across all funding sources.

6.

Does the state have a strategic plan addressing the solid waste issues facing the state.

7.

How does the packaging of grants and loans fit into this strategic plan.

8.

What are the total future estimated costs to New Mexico to meet the solid waste facility

needs of its communities.

MA/nt