0001|                            SENATE BILL 41
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0002|     43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
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0003|                            INTRODUCED BY
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0004|                          BEN D. ALTAMIRANO
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0005|     
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0006|                                   
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0007|     
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0008|                                   
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0009|     
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0010|                                AN ACT
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0011|     RELATING TO STATE GOVERNMENT FUNCTIONS; ENACTING THE
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0012|     PRIVATIZATION ACT; PROVIDING REQUIREMENTS AND CONDITIONS FOR
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0013|     PRIVATIZATION EFFORTS; REQUIRING A COST-BENEFIT ANALYSIS OF
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0014|     POTENTIAL PRIVATIZATION; PROVIDING POWERS AND DUTIES.
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0015|     
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0016|     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0017|          Section 1.  SHORT TITLE.--This act may be cited as the
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0018|     "Privatization Act".
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0019|          Section 2.  LEGISLATIVE FINDINGS AND PURPOSE.--
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0020|               A.  The legislature finds that:
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0021|                    (1)  there is a national trend toward smaller
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0022|     government and an increasing trend toward providing
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0023|     governmental services through contract with private sector
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0024|     labor rather than state employees;
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0025|                    (2)  while privatization may be cost
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0001|     effective, inappropriate privatization can result in increases
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0002|     in the cost of providing functions and decreases in the
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0003|     quality of delivered functions, as well as additional costs
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0004|     associated with reestablishing the function within an agency;
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0005|     and
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0006|                    (3)  the decision to privatize should be based
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0007|     on objective measures of the efficacy of privatization,
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0008|     including lower cost to taxpayers and better delivery of
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0009|     services.
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0010|               B.  The legislature finds further that
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0011|     privatization should be undertaken only when consistent with
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0012|     the constitution of New Mexico and statutes.  Without
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0013|     legislative action to eliminate a program, service or
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0014|     regulation, or other appropriate legislative action, an agency
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0015|     is constrained in its ability to delegate its authority and
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0016|     responsibility.
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0017|               C.  The purpose of the Privatization Act is to
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0018|     ensure that privatization is implemented appropriately and
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0019|     cost effectively and will truly benefit the citizens of New
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0020|     Mexico.
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0021|          Section 3.  DEFINITIONS.--As used in the Privatization
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0022|     Act:
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0023|               A.  "agency" means a department, office, agency,
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0024|     board, commission, institution, branch or school district of
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0025|     the state, including courts and district attorneys, that
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0001|     receives a direct appropriation from the legislature; 
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0002|               B.  "appropriate authority" includes the governor,
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0003|     attorney general, state treasurer, commissioner of public
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0004|     lands, supreme court, board of regents, state board of
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0005|     education or other official that has ultimate control of an
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0006|     agency;
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0007|               C.  "function" means a program, service or activity
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0008|     that an agency has a direct or indirect statutory obligation
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0009|     to administer or perform;
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0010|               D.  "person" means an individual or a business,
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0011|     corporation, association, partnership or similar legal entity;
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0012|     and
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0013|               E.  "privatization" means the supplantation of
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0014|     state or public school employees with a private sector

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0015|     contract to perform an agency function.
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0016|          Section 4.  PRIVATIZATION CONTRACTS.--An agency may
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0017|     propose to privatize any of its functions, but it shall not
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0018|     delegate its authority or responsibility.  An agency's
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0019|     contract with a private sector provider shall provide for
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0020|     adequate supervision of the provider's activities to ensure
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0021|     that there is no inappropriate delegation of the agency's
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0022|     authority.
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0023|          Section 5.  PRIVATIZATION--COST-BENEFIT ANALYSIS--
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0024|     REPORT.--
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0025|               A.  An agency that is considering privatizing any
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0001|     of its functions shall conduct a cost-benefit analysis of the
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0002|     action.  The analysis shall include:
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0003|                    (1)  the potential one-time savings and the
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0004|     potential annual recurring savings from privatization;
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0005|                    (2)  the potential market for privatization;
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0006|                    (3)  the relative strengths and weaknesses of
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0007|     governmental and private sector customer service mechanisms;
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0008|     and
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0009|                    (4)  the impact of possible reduced services
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0010|     on the citizens of the state.
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0011|               B.  An agency shall not consider for privatization
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0012|     any of the following:
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0013|                    (1)  a function that directly or significantly
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0014|     consists of planning or making public policy;
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0015|                    (2)  a function that directly or significantly
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0016|     affects the investigation or prosecution of a criminal act,
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0017|     the operation of a court or the preservation of the public
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0018|     peace or health; 
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0019|                    (3)  a function that makes judgments or
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0020|     recommendations relative to the fiscal policy of the state or
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0021|     judgments pertaining to the making of rules by which
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0022|     entitlements are granted; and
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0023|                    (4)  a function that regulates the business,
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0024|     occupation or profession of a person domiciled or doing
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0025|     business in New Mexico; provided that an agency may recommend
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0001|     to the legislature the elimination of the regulation.
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0002|               C.  The agency shall propose privatization of a
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0003|     function only if the cost-benefit analysis determines that:
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0004|                    (1)  a private sector provider can provide the
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0005|     function for less cost than the agency, and that the annual
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0006|     savings will be fifteen percent or more of the agency's most 
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0007|     recently completed fiscal year's expenditures for that
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0008|     function; or
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0009|                    (2)  a private sector provider can provide the
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0010|     function for an aggregate fifteen percent less than the agency
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0011|     proposes as an aggregate charge for performing the function.
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0012|               D.  The agency shall report its findings, including
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0013|     its working papers and methodology for the cost-benefit
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0014|     analysis, and recommendations for statutory changes to the
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0015|     appropriate authority.  If the appropriate authority approves
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0016|     of the findings, it shall transmit a copy of the report to the
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0017|     department of finance and administration and the legislative
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0018|     finance committee by October 1 preceding a regular session of
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0019|     the legislature in which the appropriate authority proposes
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0020|     that a function be privatized.
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0021|               E.  The department of finance and administration
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0022|     and the legislative finance committee shall examine the
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0023|     agency's findings and recommendations and evaluate the cost-
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0024|     benefit analysis.  Recommendations of the department and the
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0025|     committee shall be included in the respective budget
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0001|     documents. 
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0002|               F.  An agency shall not privatize a function
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0003|     without the approval of the legislature.
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0004|          Section 6.  EFFECTIVE DATE.--The effective date of the
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0005|     provisions of this act is July 1, 1998.
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0006|                              
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