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F I S C A L I M P A C T R E P O R T
SPONSOR Rodella
ORIGINAL DATE
LAST UPDATED
2/02/07
3/16/07 HB 466/aSFC
SHORT TITLE Fire Protection Grant Fund Transfers
SB
ANALYST Earnest
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
FY09
($1,640.0)
($3,280.0)
($4,920.0) Recurring General Fund
$1,640.0
$3,280.0
$4,920.0 Recurring Fire Protection
Grant Fund
(Parenthesis ( ) Indicate Revenue Decreases)
Note: See revised Fiscal Implications Section for out-year impacts.
Relates to Senate Bill 515
SOURCES OF INFORMATION
LFC Files
Responses Received From
Department of Finance and Administration (DFA)
Public Regulation Commission (PRC)
SUMMARY
Synopsis of SFC Amendment
The Senate Finance Committee (SFC) amendment spreads the phase-out of the general fund
transfer to 15 years from nine years. The amendment reduces the FY07 grant fund distribution
by about $3.3 million. See the revised Fiscal Implications section for more detail.
Synopsis of Original Bill
House Bill 466 would phase-out over nine years the transfer of balances in the fire protection
fund (FPF) to the general fund. HB 466 would distribute annually increasing amounts of the Fire
Protection Fund balances to the non-reverting, income-retaining fire protection grant fund,
created in the 2006 session. The Fire Protection Grant Council would allocate money in the fund
to fire districts through criteria they establish.
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House Bill 466/aSFC – Page
2
The bill also repeals section 59A-53-15, effectively changing the calculation of the fund balance.
FISCAL IMPLICATIONS
The proposed amendment to HB 466 would eliminate the general fund reversion of the fire
protection fund by fiscal year 2021. Over the 15-year period, the bill increases distributions to
the fire protection grant fund to be allocated to fire districts by the grant council. Laws 2006,
Chapter 103 (HB 497), set aside all growth in the fire protection fund for distribution to fire
districts. Thus, under current law, the maximum that can revert to the general fund is $24.6
million as set in FY06. By fiscal year 2021, the grant council will be allocating this $24.6
million to fire districts to improve fire protection. The following table shows the increase in the
distribution to the grant fund and decrease in the general fund reversion.
Fifteen-year Phase-out of the General Fund Reversion
Fund Balance after
Distributions and
Appropriations
Percent
G rant Fund
Distribution
General Fund
Reversion
FY06 Actual
$ 24,600,000
-
-
$24,600,000
FY07
$ 24,600,000 6.7% $ 1,640,000.0 $ 22,960,000.0
FY08
$ 24,600,000 13.4% $ 3,296,400.0 $ 21,303,600.0
FY09
$ 24,600,000 20.1% $ 4,936,400.0 $ 19,663,600.0
FY10
$ 24,600,000 26.8% $ 6,592,800.0 $ 18,007,200.0
FY11
$ 24,600,000 33.5% $ 8,232,800.0 $ 16,367,200.0
FY12
$ 24,600,000 40.2% $ 9,889,200.0 $ 14,710,800.0
FY13
$ 24,600,000 46.9% $ 11,529,200.0 $ 13,070,800.0
FY14
$ 24,600,000 53.6% $ 13,185,600.0 $ 11,414,400.0
FY15
$ 24,600,000 60.3% $ 14,825,600.0 $ 9,774,400.0
FY16
$ 24,600,000 67.0% $ 16,482,000.0 $ 8,118,000.0
FY17
$ 24,600,000 73.7% $ 18,122,000.0 $ 6,478,000.0
FY18
$ 24,600,000 80.4% $ 19,778,400.0 $ 4,821,600.0
FY19
$ 24,600,000 87.1% $ 21,418,400.0 $ 3,181,600.0
FY20
$ 24,600,000 93.8% $ 23,074,800.0 $ 1,525,200.0
FY21
$ 24,600,000 100.0% $ 24,600,000.0 $ -
Current Law
Reversions to General Fund
(FY07-FY21)
Proposed Law
Reversions to General Fund
(FY07-FY21)
Difference
$ 369,000,000
$171,396,400
$197,603,600
Distributions to the grant council will not be subject to legislative appropriation.
Original Fiscal Impact
HB 466 proposes to eliminate the general fund reversion of the fire protection fund by fiscal year
2015. Over the years, the bill increases distributions to the fire protection grant fund to be
distributed to fire districts by the grant council. Laws 2006, Chapter 103 (HB 497) set aside all
growth in the fire protection fund for distribution to fire districts. Thus, under current law, the
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House Bill 466/aSFC – Page
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maximum that can revert to the general fund is $24.6 million as set in FY06. By fiscal year
2015, the grant council will be allocating this $24.6 million to fire districts to improve fire
protection. The following table shows the increase in the distribution to the grant fund and
decrease in the general fund reversion.
Nine-year Phase-out of the General Fund Reversion
Fund Balance after
Distributions and
Appropriations
Percent
G rant Fund
Distribution
General Fund
Reversion
FY06 Actual Rev
$ 24,600,000
FY07
$ 24,600,000
20% $ 4,920,000 $ 19,680,000
FY08
$ 24,600,000
30% $ 7,380,000 $ 17,220,000
FY09
$ 24,600,000
40% $ 9,840,000 $ 14,760,000
FY10
$ 24,600,000
50% $ 12,300,000 $ 12,300,000
FY11
$ 24,600,000
60% $ 14,760,000 $ 9,840,000
FY12
$ 24,600,000
70% $ 17,220,000 $ 7,380,000
FY13
$ 24,600,000
80% $ 19,680,000 $ 4,920,000
FY14
$ 24,600,000
90% $ 22,140,000 $ 2,460,000
FY15
$ 24,600,000 100% $ 24,600,000
$ -
FY16
$ 24,600,000 100% $ 24,600,000
$ -
Current Law
Reversions to General Fund
(FY07-FY15)
Proposed Law
Reversions to General Fund
(FY07-FY15)
Difference
$ 221,400,00
$ 88,560,000
$ 132,840,000
SIGNIFICANT ISSUES
The Fire Protection Fund receives insurance premium taxes paid to the state for property and
vehicle insurance. Distributions to county and municipal fire districts are made from the fund by
formula based on districts’ Insurance Service Office (ISO) ratings. In the 2006 session, those
distributions were increased by about 40 percent. Any growth in the fund will be dedicated to
distributions to county and municipal fire districts. The total amount collected for the fire
protection fund in FY06 was about $60 million. Assuming 2 percent growth in the fund, by
FY15 the state will be distributing more than $70 million per year to fire districts.
The 2003 Legislature approved a needs assessment study for the State Fire Marshal's Office
which was completed in December 2005. The study is extensive and comprehensive and
recommends an emphasis be placed on bringing ISO rated 9 and 10 county and city districts up
to an 8 rating. According to DFA, the study found it would require $56 million to accomplish
this improvement. The reduction of the transfer to the general fund is about $133 million over
nine years, which may be more than required
Laws 2006, Chapter 103 (HB 497), created the Fire Protection Grant Fund. Due to a technical
error in the bill, the section distributing monies to the grant fund was vetoed. This bill would
make law the vetoed section.
According to PRC, the new fund is intended to make allocations approved by the grant fund
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House Bill 466/aSFC – Page
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council for the critical needs of municipal and county fire departments. The council would
develop criteria for assessing the critical needs of the departments for fire apparatus and
equipment, communications equipment, equipment for wildfires, fire station construction or
expansion or equipment for hazardous material response.
Applications for grant assistance from the Fire Protection Grant Fund would be made by fire
departments to the council in accordance with the requirements of the council. The council
would develop needs criteria. It was anticipated that the priority needs would include those
items that would assist fire departments in ISO classes 9 and 10 improve their community fire
protection rating per the needs assessment conducted by the State Fire Marshal’s Office.
The anticipated benefits include better equipped fire departments, replacement of old apparatus
and lower ISO ratings. Some rate payers should qualify for reduced insurance rates if their local
community ISO rating is lowered.
ADMINISTRATIVE IMPLICATIONS
PRC does not identify any administrative implications. However, making allocations from the
grant fund and participating in the grant council would increase workload.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
House Bill 466 duplicates Senate Bill 515.
TECHNICAL ISSUSES
There is no requirement to report on the activities of the grant council or on the benefits of the
increased distributions.
ALTERNATIVES
Instead of setting up the distribution to the fund, the Legislature could appropriate the needed
annual amount to the fire grant fund for awards to districts with critical needs.
BE/mt:nt