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

SPONSOR King

ORIGINAL DATE

LAST UPDATED

1/21/08

2/14/08 HB

221/aHVEC/aSFl#1

/aCC

SHORT TITLE Allow Electronic Voting System Negotiations

SB

ANALYST Ortiz

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY08

FY09

FY10 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$1,268.6 $1,268.6 $2,537.2 Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB517

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Secretary of State (SOS)

Association of County Clerks (ACC)

SUMMARY

Synopsis of CC#1 Amendment

Conference Committee Amendment 1 approves HVEC amendment that allows the State Board

of Finance to dispose of electronic voting systems acquired pursuant to the law. It disapproves

the Senate Floor amendment and enacts a new section that requires the state to pay all voting

systems software and hardware maintenance costs regardless if the system is state or county-

owned; it requires the counties to both store and pay storage costs for the voting systems

regardless if the system is state or county-owned. It also amends Section 1-9-12 NMSA 1978,

Care and Custody of Systems, to clarify that it is the county clerk’s responsibility to properly

House Bill 221/ aHVEC/aSFl#1 – Page

2

store and transport voting systems to and from polling places. It further states that the county

clerk be responsible for the keys, seals and programming of all voting systems in the custody of

the county.

Synopsis of SFl#1 Amendment

Senate Floor Amendment 1 to HVEC amendment to House Bill 221 enacts a new section to the

election code that would not allow the state to transfer ownership of the paper ballot voting

systems it purchased to the counties without permission from each of the board of county

commissioners. It also requires the state to provide maintenance on its state-owned paper ballot

voting systems. The counties shall store the voting systems pursuant to guidelines issued by the

Secretary of State.

Synopsis of HVEC Amendment

House Voters and Elections Committee Amendment 1, revises language in Subsection C, which

is at the end of the bill, to say that the State Board of Finance may dispose of electronic voting

systems acquired pursuant to the law. In the original bill, instead of pursuant to the law, it was

pursuant to “this subsection in any manner that is consistent with the interests of the state."

Synopsis of Original Bill

House Bill 221 amends Section 1-9-17 to permit the State Board of Finance and counties to

renegotiate their lease-purchase contracts on electronic voting machines and thus impact the

disposition of the machines. The bill states: “Upon the transfer of ownership in the electronic

voting systems to the state board of finance, the contract shall be terminated and no additional

payments from the county shall be due."

FISCAL IMPLICATIONS

Documents submitted by the Secretary of State indicate that there are three pieces of paper ballot

voting equipment that need to be covered by maintenance agreements; the M100, which reads

the paper ballots; the Automark, which make voting ADA compliant; and the M650, which

counts the ballots. The attached spreadsheet lists by county the maintenance cost for the paper

ballot voting systems. The Secretary of State estimates that the hardware and software warranty

agreement on the voting systems would be $1.3 million annually. The Secretary of State also

suggests including an emergency clause in the bill, which would allow it to cover maintenance

costs that may be need for the June primary. If the bill does not pass, counties may look to BOF

for a loan.

SIGNIFICANT ISSUES

As a point of clarification, this bill and its Senate Floor amendment address two sets of voting

systems. First, are touch screen machines currently owned by the State Board of Finance and

purchased through the Electronic Voting System Revolving Fund, which are referenced in the

originally introduced bill. Second, are the paper ballot systems currently owned by the Secretary

of State and referenced in the Senate Floor amendment.

House Bill 221/ aHVEC/aSFl#1 – Page

3

The Attorney General’s Office questions if under the amendment, the State Board of Finance

will have to pay maintenance fees. Is this consistent with Section 1-9-17(B) (4). What if in the

future a county enters into a lease purchase agreement with the Board of Finance for additional

paper ballot machines. Who is responsible then.

Prior to 2006, many counties entered into lease-purchase agreements with the State Board of

Finance on touch screen voting machines. Under Section 1-9-17(B), the counties agree to own

the machines upon completion of several lease payments to the Board of Finance. However, the

2006 Legislature effectively banned the use of touch screen voting machines in New Mexico.

This meant several counties still owed payment on these machines, but could no longer use them

in elections and did not have ownership rights to sell them.

It is unclear whether House Bill 221 is meant to address this situation. The bill refers to “transfer

of ownership" to the State Board of Finance but the counties have been paying “lease" payments

in order to purchase these machines and get full ownership of the machines. Why would

ownership be transferred to the State Board of Finance now. If so, does “transfer of ownership"

mean that “no additional payments from the county" shall be due.

The Senate Floor Amendment also addresses ownership and maintenance of the paper ballot

voting systems. It would allow counties to refuse to take ownership (and thus not pay the

maintenance fees) for voting machines. The counties have traditionally had to purchase voting

machines (via lease purchase agreements from the State Board of Finance) and pay the fees

under Section 1-9-17.

However, in 2006, the legislature authorized the Secretary of State’s office to purchase paper-

ballot machines. Whether the legislature’s appropriation for this project also included on-going

maintenance fees for the machines is unclear. It does appear, however, that the current Secretary

of State and the county clerks do not have budgets for on-going maintenance fees.

POSSIBLE QUESTIONS

The bill refers to “transfer of ownership" to the State Board of Finance but the counties have

been paying “lease" payments in order to purchase these machines and get full ownership of the

machines. Why would ownership be transferred to the State Board of Finance now. If so, does

“transfer of ownership" mean that “no additional payments from the county" shall be due.

EO/mt:bb