SENATE BILL 1
50th legislature - STATE OF NEW MEXICO - first session, 2011
INTRODUCED BY
Michael S. Sanchez
AN ACT
RELATING TO PUBLIC MONEY; ENACTING THE RECOVERY INVESTMENT BONDING ACT; AUTHORIZING THE ISSUANCE OF SHORT-TERM REVENUE BONDS, KNOWN AS "RECOVERY INVESTMENT NOTES", FOR THE PURPOSE OF SUPPLEMENTING REVENUE TO THE GENERAL FUND; PLEDGING GROSS RECEIPTS TAX REVENUE FOR THE RETIREMENT OF THE BONDS; MAKING AN APPROPRIATION; DECLARING AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 9 of this act may be cited as the "Recovery Investment Bonding Act".
SECTION 2. [NEW MATERIAL] FINDINGS AND PURPOSE.--
A. The legislature finds that:
(1) the state, national and world economies have experienced a decline in economic activity that is of sufficient severity to place the state's finances in an untenable position;
(2) in the next fiscal year, even after the implementation of legislative and executive initiatives, appropriations are expected to substantially exceed revenues and it is unlikely that the state will be able to cut expenditures or increase revenues enough to fund essential state services at even a minimum level;
(3) for the longer term, sustained economic growth is expected, with a return to job creation and resulting income and revenue growth; and
(4) New Mexico's general fund needs a short-term influx of revenue, one which can be provided without any severe, negative long-term effects, so that a minimum level of essential state services can still be provided to citizens.
B. The purpose of the Recovery Investment Bonding Act is to provide a mechanism for the state to invest enough money from its permanent funds to avoid extreme economic hardship for its citizens, while providing a secure revenue source that will pay the debt and guarantee that the long-term health and stability of those funds are not threatened.
SECTION 3. [NEW MATERIAL] RECOVERY INVESTMENT NOTES AUTHORIZATION--DISTRIBUTION OF PROCEEDS.--
A. The state board of finance is authorized to issue and sell revenue bonds, known as "recovery investment notes", payable solely from the recovery investment bonding fund, in compliance with the Recovery Investment Bonding Act for the purpose of augmenting the balance of the general fund in order to meet general fund appropriations. The bonds may be issued when the secretary of finance and administration has certified the need for the issuance of the bonds; provided that the total amount of recovery investment notes issued pursuant to the Recovery Investment Bonding Act shall not exceed three hundred million dollars ($300,000,000).
B. The net proceeds from the sale of recovery investment notes shall be deposited in the general fund and may be used to meet appropriations from that fund.
C. After June 30, 2012, no additional recovery investment notes shall be issued.
SECTION 4. [NEW MATERIAL] RECOVERY INVESTMENT BONDING FUND CREATED--MONEY IN THE FUND PLEDGED.--
A. The "recovery investment bonding fund" is created as a special fund within the state treasury. The fund shall consist of money appropriated and transferred to the fund and gross receipts tax revenues distributed to the fund by law. Earnings of the fund shall be credited to the fund. Balances in the fund at the end of any fiscal year shall remain in the fund, except as provided in this section.
B. Money in the recovery investment bonding fund is pledged for the payment of principal and interest on all recovery investment notes issued pursuant to the Recovery Investment Bonding Act and is appropriated to the state board of finance for the purpose of paying debt service, including redemption premiums, on the recovery investment notes and the expenses incurred in the issuance, payment and administration of the notes.
C. On the last day of January and July of each year, the state board of finance shall estimate the amount needed to make debt service and other payments during the next twelve months from the recovery investment bonding fund on the recovery investment notes issued pursuant to the Recovery Investment Bonding Act plus the amount that may be needed for any required reserves. The state board of finance shall transfer to the general fund any balance in the recovery investment bonding fund above the estimated amounts.
D. Any balance remaining in the recovery investment bonding fund shall be transferred to the general fund upon certification by the state board of finance to the secretary of finance and administration that the recovery investment notes issued pursuant to the Recovery Investment Bonding Act have been retired, that no additional obligations of the recovery investment bonding fund exist and that no additional expenditures from the fund are necessary.
E. The recovery investment notes issued pursuant to the Recovery Investment Bonding Act shall be payable solely from the recovery investment bonding fund or, with the approval of the bondholders, from such other special funds that may be provided by law. The recovery investment notes do not create an obligation or indebtedness of the state within the meaning of any constitutional provision. No breach of any contractual obligation incurred pursuant to that act shall impose a pecuniary liability or a charge upon the general credit or taxing power of the state, and the bonds are not general obligations for which the state's full faith and credit is pledged.
F. The state does hereby pledge that the recovery investment bonding fund shall be used only for the purposes specified in this section and shall be pledged first to pay the debt service on the recovery investment notes issued pursuant to the Recovery Investment Bonding Act. The state further pledges that any law authorizing the distribution of taxes or other revenues to the recovery investment bonding fund or authorizing expenditures from the fund shall not be amended or repealed or otherwise modified so as to impair the bonds to which the recovery investment bonding fund is dedicated as provided in this section.
SECTION 5. [NEW MATERIAL] AUTHORITY TO REFUND BONDS.--The state board of finance may issue and sell recovery investment notes to refund outstanding recovery investment notes by exchange, immediate or prospective redemption, cancellation or escrow, including the escrow of debt service funds accumulated for payment of outstanding bonds, or any combination thereof, when, in its opinion, such action will be beneficial to the state.
SECTION 6. [NEW MATERIAL] RECOVERY INVESTMENT NOTES--FORM--EXECUTION.--
A. The state board of finance, except as otherwise specifically provided in the Recovery Investment Bonding Act, shall determine at its discretion the terms, covenants and conditions of recovery investment notes, including, but not limited to, date of issue, denominations, maturities, rate or rates of interest, call features, call premiums, registration, refundability and other covenants covering the general and technical aspects of the issuance of the bonds; provided that: (1) the rate of interest payable on recovery investment notes shall not exceed the equivalent yield available on United States treasury issues of a comparable maturity plus two hundred basis points; and
(2) the term of recovery investment notes shall not exceed five years.
B. The recovery investment notes shall be in such form as the state board of finance may determine, and successive issues shall be identified by alphabetical, numerical or other proper series designation.
C. Recovery investment notes shall be signed and attested to by the state treasurer and shall be executed with the facsimile signature of the governor and the facsimile seal of the state, except for notes issued in book entry or similar form without the delivery of physical securities. Any interest coupons attached to the notes shall bear the facsimile signature of the state treasurer, which officer, by the execution of the notes, shall adopt as the treasurer's own signature the facsimile thereof appearing on the coupons. Except for notes issued in book entry or similar form without the delivery of physical securities, the Uniform Facsimile Signature of Public Officials Act shall apply, and the state board of finance shall determine, the manual signature to be affixed to the bonds.
SECTION 7. [NEW MATERIAL] PROCEDURE FOR SALE OF RECOVERY INVESTMENT NOTES.--
A. Recovery investment notes shall be sold by the state board of finance at such times and in such manner as the board may elect, consistent with the need as certified by the secretary of finance and administration.
B. Recovery investment notes shall be sold only at private sale for a negotiated price and only to the state investment officer as an investment of the land grant permanent funds or the severance tax permanent fund.
SECTION 8. [NEW MATERIAL] RECOVERY INVESTMENT BONDING ACT IS FULL AUTHORITY FOR ISSUANCE OF NOTES--LEGAL INVESTMENTS.--
A. The Recovery Investment Bonding Act shall, without reference to any other act of the legislature, be full authority for the issuance and sale of recovery investment notes, which notes shall have all the qualities of investment securities under the Uniform Commercial Code and shall not be invalid for any irregularity or defect or be contestable in the hands of bona fide purchasers or holders thereof for value.
B. Recovery investment notes are legal investments for the land grant permanent funds and the severance tax permanent fund.
SECTION 9. [NEW MATERIAL] SUIT MAY BE BROUGHT TO COMPEL PERFORMANCE.--Any holder of recovery investment notes or any person or officer being a party in interest may sue to enforce and compel the performance of the provisions of the Recovery Investment Bonding Act.
SECTION 10. A new section of the Tax Administration Act is enacted to read:
"[NEW MATERIAL] DISTRIBUTION--RECOVERY INVESTMENT BONDING FUND--GROSS RECEIPTS TAX.--Commencing on the last day of the month in which the state board of finance certifies to the secretary that recovery investment notes have been issued pursuant to the Recovery Investment Bonding Act, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the recovery investment bonding fund from the net receipts attributable to the gross receipts tax imposed by the Gross Receipts and Compensating Tax Act for the purpose of making debt service payments on outstanding recovery investment notes. The amount of the distribution shall be the amount certified by the state board of finance as needed to make the debt service payments plus the amount needed for any necessary reserves; provided that the distribution shall not exceed five million seven hundred thousand dollars ($5,700,000). The distribution shall be made:
A. after the required distribution pursuant to Section 7-1-6.4 NMSA 1978;
B. contemporaneously with other distributions of net receipts attributable to the gross receipts tax for payment of debt service on outstanding bonds or to a fund dedicated for that purpose; and
C. prior to any other distribution of net receipts attributable to the gross receipts tax."
SECTION 11. DELAYED REPEAL.--The Recovery Investment Bonding Act and Section 10 of this 2011 act are repealed on the earliest of the following dates:
A. the first day of the first month following the month in which the state board of finance certifies to the secretary of finance and administration, the secretary of taxation and revenue, the legislative council service and the New Mexico compilation commission that the recovery investment notes issued pursuant to the Recovery Investment Bonding Act have been retired, that no additional obligations of the recovery investment bonding fund exist and that no additional expenditures from that fund are necessary; or
B. July 1, 2017.
SECTION 12. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.
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