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

SPONSOR Morales

ORIGINAL DATE

LAST UPDATED

1-28-2008

HB

SHORT TITLE Gila Water Settlement Benefits

SB 433

ANALYST Woods

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

NFI

$1,500.0

Non-Recurring

General

(Parenthesis ( ) Indicate Expenditure Decreases)

SB433, HB483, HB485, and HM27 are related

.

SOURCES OF INFORMATION

LFC Files

Responses Received From

1

Department of Finance and Administration (DFA)

Office of the State Engineer (OSE)

Environment Department (NMED)

SUMMARY

Synopsis:

Senate Bill 433 seeks to appropriate $1,500,000 from the general fund to the Interstate Stream

Commission for expenditure in fiscal year 2009 to support a multi-stakeholder planning process

in developing a plan to optimize the 2004 Arizona Water Settlements Act in a cost-effective

manner that will balance historical and future demands for water against an uncertain supply

while protecting the environment. Any unexpended or unencumbered balance remaining at the

end of fiscal year 2009 shall revert to the general fund.

SIGNIFICANT ISSUES

OSE indicates that, in June 2006, the Governor issued a policy statement directing the Interstate

stream Commission (ISC) to institute a multi-stakeholder planning process to plan for utilization

of the benefits New Mexico received in the 2004 Arizona Water Settlements Act. Those benefits

include up to 14,000 acre-feet of additional water in the Gila and San Francisco Basins and up to

1

Agency replies include responses to bills SB433, HB483, and HB485.

Senate Bill 433 – Page

2

$128 million in non-reimbursable federal funding. The funding in this bill would allow the ISC

to execute the planning and studies agreed upon by the Southwest New Mexico Stakeholder

Group and necessary to meet the goals of the group. The funding will provide for the required

basic ecological studies as well as the demand management, conservation, demographic, and

socio-economic studies added in the Governor’s policy statement and adopted by the group.

OSE further notes that the implementation Committee of the Southwest New Mexico

Stakeholder Group, with additional members from the group, recently agreed on language the

group would request be incorporated in any funding request. The language suggested by the

Implementation Committee was circulated to all the members of the Southwest New Mexico

Stakeholder Group and received no negative comments. This appropriation fully adopts the

suggested language.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

SB433, HB483, HB485, and HM27 are related in that all addresses Arizona Water Rights

Settlement Act considerations. With the exception of the word “utilize" in line 19 of HB483,

HB483 is identical to SB433 and HB485 which use the “optimize" as opposed to “utilize" on

line 19.

OTHER SUBSTANTIVE ISSUES

NMED advises that, pursuant to a joint powers agreement with the ISC, the NMED was a

participant in Arizona Water Rights Settlement Act discussions and has collected water quality

data to support the project. NMED’s continued participation is necessary to ensure that water

quality issues are fully considered. Further, the legislation acknowledges the potential

environmental impact of water projects and requires that ISC’s planning process balance

historical and future demands for water against an uncertain supply while protecting the

environment. Stakeholder input regarding environmental and ecosystem impacts are critical

issues to be addressed by ISC.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

OSE suggests that the 2004 Arizona Water settlements Act requires that if New Mexico chooses

to develop any of the 14,000 acre-feet of addition Gila water, New Mexico must craft a plan by

2014 that complies with all federal environmental mandates. Should New Mexico fail to do so,

the federal funding would be limited to $66 million. The studies needed to meet the mandate in

the Act, including the ecological, demand management, conservation, and socio-economic

studies, will require significant investment of up to $6 million by New Mexico and will be

difficult to complete before 2014 unless they are begun very soon. If the studies are not

completed before 2014, the plan cannot be adequately crafted and New Mexico will lose up to

$62 million of non-reimbursable federal funding and possibly all of the additional 14,000 acre-

feet of water from the Gila and San Francisco Basins.

BFW/mt