SENATE BILL 10
46th legislature - STATE OF NEW MEXICO - first special session, 2003
INTRODUCED BY
William E. Sharer
AN ACT
RELATING TO STATE FINANCES; ENACTING THE ECONOMIC STIMULUS BONDING ACT; AUTHORIZING THE NEW MEXICO FINANCE AUTHORITY TO ISSUE ECONOMIC STIMULUS ANTICIPATION BONDS; CREATING A SPECIAL FUND CONSISTING OF GROSS RECEIPTS TAX DISTRIBUTIONS; AUTHORIZING THE INVESTMENT OF THE SEVERANCE TAX PERMANENT FUND IN ECONOMIC STIMULUS ANTICIPATION BONDS; MAKING AN APPROPRIATION.
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 "Economic Stimulus Bonding Act".
Section 2. [NEW MATERIAL] FINDINGS AND PURPOSE.--
A. The legislature finds that:
(1) the tax decrease effected by the enactment of Laws 2003, Chapter 2 will provide a long-term economic stimulus to the economy of the state with a resulting increase in state revenues; however, the short-term impact of the tax decrease will be detrimental to general fund balances;
(2) the increase in state revenues over the long term can be expected to far exceed the short-term detrimental impact on the general fund; and
(3) investment of the severance tax permanent fund at differential rates in order to avoid adverse short-term effects on the general fund and to maintain state services at a high level will help to stimulate the economy and is a proper investment for the fund.
B. The purpose of the Economic Stimulus Bonding Act is to invest the severance tax permanent fund in bonds, the proceeds of which shall be used to avoid short-term detrimental impacts caused by the tax decrease and to pay for the bonds with distributions from a special fund composed of distributions of gross receipts tax revenues that reflect a portion of the increased revenues that will result from lower tax rates.
Section 3. [NEW MATERIAL] NEW MEXICO FINANCE AUTHORITY TO ISSUE ECONOMIC STIMULUS ANTICIPATION BONDS--APPROPRIATION OF PROCEEDS--CONTINGENCY.--
A. The New Mexico finance authority is authorized to issue and sell revenue bonds, known as "economic stimulus anticipation bonds" in an amount not to exceed five hundred million dollars ($500,000,000), payable solely from the economic stimulus anticipation bonding fund, in compliance with the Economic Stimulus Bonding Act when the secretary of finance and administration certifies that the bond proceeds are needed to offset short-term detrimental effects caused by the enactment of Laws 2003, Chapter 2 and certifies the amount of bond proceeds needed.
B. The net proceeds from the economic stimulus anticipation bonds, after reimbursing the New Mexico finance authority for the costs of issuance, are appropriated to the tax-cut impact mitigation fund to be appropriated by the legislature for purposes consistent with the purpose of the Economic Stimulus Bonding Act.
Section 4. [NEW MATERIAL] ECONOMIC STIMULUS ANTICIPATION BONDING FUND CREATED--MONEY IN THE FUND PLEDGED.--
A. The "economic stimulus anticipation bonding fund" is created as a special fund within the New Mexico finance authority. The fund shall be administered by the New Mexico finance authority as a special account. 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 economic stimulus anticipation bonding fund is pledged for the payment of principal and interest on all economic stimulus anticipation bonds issued pursuant to the Economic Stimulus Bonding Act. Money in the fund is appropriated to the New Mexico finance authority for the purpose of paying debt service on the economic stimulus anticipation bonds and the expenses incurred in the payment and administration of the bonds.
C. On the last day of January and July of each year, the New Mexico finance authority shall estimate the amount needed to make debt service and other payments during the next twelve months from the economic stimulus anticipation bonding fund on the economic stimulus anticipation bonds issued pursuant to the Economic Stimulus Bonding Act plus the amount that may be needed for any required reserves. The New Mexico finance authority shall transfer to the general fund any balance in the economic stimulus anticipation bonding fund above the estimated amounts.
D. Any balance remaining in the economic stimulus anticipation bonding fund shall be transferred to the general fund upon certification by the New Mexico finance authority that:
(1) the secretary of finance and administration and the New Mexico finance authority have agreed that the economic stimulus anticipation bonds issued pursuant to the Economic Stimulus Bonding Act have been retired, that no additional obligations of the economic stimulus anticipation bonding fund exist and that no additional expenditures from the fund are necessary; or
(2) a court of jurisdiction has ruled that the economic stimulus anticipation bonds have been retired, that no additional obligations of the economic stimulus anticipation bonding fund exist and that no additional expenditures from the fund are necessary.
E. The economic stimulus anticipation bonds issued pursuant to the Economic Stimulus Bonding Act shall be payable solely from the economic stimulus anticipation bonding fund or, with the approval of the bond holders, such other special funds as may be provided by law and that 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 economic stimulus anticipation bonding fund shall be used only for the purposes specified in this section and pledged first to pay the debt service on the economic stimulus anticipation bonds issued pursuant to the Economic Stimulus Bonding Act. The state further pledges that any law authorizing the distribution of taxes or other revenues to the economic stimulus anticipation 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 economic stimulus anticipation bonding fund is dedicated as provided in this section.
Section 5. [NEW MATERIAL] ECONOMIC STIMULUS ANTICIPATION BONDS--FORM--EXECUTION.--
A. The New Mexico finance authority shall determine at its discretion the terms, covenants and conditions of economic stimulus anticipation bonds, including 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 except:
(1) the bonds shall bear interest at market rates pursuant to Section 7-27-5 NMSA 1978;
(2) the bonds shall have a maturity of no more than thirteen years from the date of issue;
(3) the bonds shall provide that debt service payments shall not be due within three years from the date of issue;
(4) the bonds shall provide for prepayment in part or in full of the balance due at any time without penalty; and
(5) as otherwise specifically provided in the Economic Stimulus Bonding Act.
B. The economic stimulus anticipation bonds shall be in such form as the New Mexico finance authority may determine, and successive issues shall be identified by alphabetical, numerical or other proper series designation.
C. Economic stimulus anticipation bonds shall be signed and attested by the secretary of the New Mexico finance authority and shall be executed with the facsimile signature of the chairman of the New Mexico finance authority and the facsimile seal of the New Mexico finance authority, except for bonds issued in book entry or similar form without the delivery of physical securities. Any interest coupons attached to the bonds shall bear the facsimile signature of the secretary of the New Mexico finance authority, which officer, by the execution of the bonds, shall adopt as his own signature the facsimile thereof appearing on the coupons. Except for bonds 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 New Mexico finance authority shall determine the manual signature to be affixed on the bonds.
Section 6. [NEW MATERIAL] ECONOMIC STIMULUS ANTICIPATION BONDS--SALE.--Economic stimulus anticipation bonds may be sold only at a private sale and only to the state investment officer.
Section 7. [NEW MATERIAL] ECONOMIC STIMULUS BONDING ACT IS FULL AUTHORITY FOR ISSUANCE OF BONDS--SUIT TO COMPEL PERFORMANCE.--
A. The Economic Stimulus Bonding Act shall, without reference to any other act of the legislature, be full authority for the issuance and sale of economic stimulus anticipation bonds, which bonds 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. Any holder of economic stimulus anticipation bonds or any person or officer being a party in interest may sue to enforce and compel the performance of the provisions of the Economic Stimulus Bonding Act.
Section 8. [NEW MATERIAL] DETERMINATION OF EXCESS REVENUES--PREPAYMENT.--
A. As soon as practicable after October 1, 2004 and October 1 of each subsequent year in which any economic stimulus anticipation bonds remain outstanding, the secretary of finance and administration shall:
(1) subtract five percent of the general fund appropriations made for expenditure in the prior fiscal year from the unencumbered or unexpended balances of general fund revenues remaining at the end of that prior fiscal year; and
(2) transfer twenty-five percent of the amount calculated pursuant to Paragraph (1) of this subsection to the economic stimulus anticipation bonding fund.
B. Immediately upon a transfer made pursuant to Subsection A of this section, the New Mexico finance authority shall use the entire amount transferred to make prepayments on outstanding economic stimulus anticipation bonds.
Section 9. [NEW MATERIAL] TAX-CUT IMPACT MITIGATION FUND--CREATED--PURPOSE.--The "tax-cut impact mitigation fund", consisting of proceeds from the sale of economic stimulus anticipation bonds, is created in the state treasury. The fund shall be subject to appropriation by the legislature to mitigate adverse short-term effects of the tax decrease resulting from the enactment into law of Laws 2003, Chapter 2. Balances in the fund shall not revert. Upon certification by the New Mexico finance authority that all economic stimulus anticipation bonds have been retired, any unexpended or unencumbered balance remaining in the fund shall be transferred to the general fund.
Section 10. A new section of the Tax Administration Act is enacted to read:
"[NEW MATERIAL] DISTRIBUTION--ECONOMIC STIMULUS ANTICIPATION BONDING FUND--GROSS RECEIPTS TAX.--Upon certification by the secretary of the New Mexico finance authority to the secretary of taxation and revenue that economic stimulus anticipation bonds have been issued pursuant to the Economic Stimulus Bonding Act and that debt service on the bonds is due within the next twelve months, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the economic stimulus anticipation bonding fund in the amount of five million five hundred thousand dollars ($5,500,000) from the net receipts attributable to the gross receipts tax imposed by the Gross Receipts and Compensating Tax Act. 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. Section 7-27-5 NMSA 1978 (being Laws 1983, Chapter 306, Section 7, as amended) is amended to read:
"7-27-5. INVESTMENT OF SEVERANCE TAX PERMANENT FUND.--The severance tax permanent fund shall be invested for two general purposes, to provide income to the fund and to stimulate the economy of New Mexico, preferably on a continuing basis. The investments in Sections 7-27-5.1 and 7-27-5.6 NMSA 1978 shall be those intended to provide maximum income to the fund and shall be referred to as the market rate investments. The investments permitted in Sections 7-27-5.3 through 7-27-5.5,
7-27-5.13 through 7-27-5.17, 7-27-5.22 and 7-27-5.24 through [7-27-5.26] 7-27-5.27 NMSA 1978 shall be those intended to stimulate the economy of New Mexico and shall be referred to as the differential rate investments. The prudent man rule shall be applied to the market rate investments, and the state investment officer shall keep separate records of the earnings of the market rate investments. All transactions entered into on or after July 1, 1991 shall be accounted for in accordance with generally accepted accounting principles."
Section 12. A new section of the Severance Tax Bonding Act, Section 7-27-5.27 NMSA 1978, is enacted to read:
"7-27-5.27. [NEW MATERIAL] ECONOMIC STIMULUS ANTICIPATION BONDS.--Subject to the approval of the state investment council, the severance tax permanent fund may be invested in economic stimulus anticipation bonds issued by the New Mexico finance authority pursuant to the Economic Stimulus Bonding Act."
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