Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR Moore

ORIGINAL DATE

LAST UPDATED

1/30/06

HB 309

SHORT TITLE Improve Poorly-rated Fire Districts

SB

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$10,000.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Appropriation in the General Appropriation Act

The General Appropriation Act contains an authorization for the State Fire Marshal’s Office to

distribute an additional $2 million from the Fire Protection Fund to fire departments with an ISO

class rating of 9 or 10.

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

$10,000.0

Recurring Fire Protection Fund

($10,000.0)

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Public Safety (DPS)

SUMMARY

Synopsis of Bill

House Bill 309 appropriates $10 million from the general fund to the fire protection fund for ex-

penditure by the State Fire Marshal for the purpose of improving fire department with a rating

from the Insurance Services Office (ISO) of class 6 or greater.

House Bill 309 – Page

2

FISCAL IMPLICATIONS

The appropriation of $10 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of fiscal year FY08 shall revert

to the general fund.

SIGNIFICANT ISSUES

In FY05 the Fire Protection fund received transfers and deposits totaling about $55.8 million. Of

this total, approximately $24.7 million was distributed to county and municipal fire departments

and $27.2 million was deposited to the general fund. The other $3.9 million funded the opera-

tions of the State Firefighter Academy and the State Fire Marshal’s office and other statutory

disbursements. The State Fire Marshal distributes monies to fire departments from the Fire Pro-

tection Fund based on the fire districts’ Insurance Services Office (ISO) class rating.

The Insurance Services Office, Inc. rates fire department and districts on a scale of 1 to 10, with

a “1” rating indicating the best possible fire protection and a “10” rating indicating no fire pro-

tection. Fire departments are funded for each main and sub station based on their ISO rating ac-

cording to the following formula:

Fire Protection Fund Distribution Formula

ISO Class

Main Station

Substation

1

$58,245

$21,584

2

$53,957

$20,145

3

$49,641

$18,705

4

$45,323

$17,266

5

$43,164

$15,827

6

$41,007

$14,388

7

$38,848

$13,670

8

$36,691

$12,950

9

$37,339

$10,797

10

$24,460

None

The appropriation contained in HB309 would add money to the fire fund for distribution. The

bill specifies that the State Fire Marshal “shall make distributions only for specific improvements

designed to enhance the rating.”

According to the Department of Public Safety, the significant issue is the ability of smaller/rural

departments to provide protection services (water hydrants, tanker/shuttle capabilities, personnel)

that will allow the ISO to improve the ratings from higher than 6 to lower than 6 (more desir-

able). This is important to citizens in that the lower the ISO rating the lower the insurance rates.

The LFC conducted a review in 2003 of the uses of the Fire Protection Fund. The audit found

that monies are not distributed based on need. LFC further recommended that the State Fire

Marshal’s office conduct a needs assessment of the fire departments with ISO class ratings of 9

or 10 and develop a strategic plan for getting allocating additional resources to the these neediest

districts to improve to class 8b or better. The State Fire Marshal received $250 thousand to con-

House Bill 309 – Page

3

duct the needs assessment, which was completed in December 2005. The State Fire Marshal

recommended statutory changes to the cap on distributions, additional funding for the State Fire

Marshal’s office and Firefighter Training Academy, and a new grant program. The needs as-

sessment also contained a compilation of each departments equipment needs.

PERFORMANCE IMPLICATIONS

The funds are intended to target and improve those fire departments with ratings of six or higher.

The bill suggests that by adding the additional funding the Fire Marshall’s Office will be able to

oversee the distribution of the funds to those departments that will take appropriate steps to im-

prove their capabilities that will lower the ISO rating to lower than 6.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

The General Appropriation Act contains an authorization for the State Fire Marshal’s Office to

distribute an additional $2 million from the Fire Protection Fund to fire departments with an ISO

class rating of 9 or 10.

ALTERNATIVES

Instead of appropriating $10 million from the general fund to the fire protection fund for distri-

bution, the legislation might accomplish the same goal by authorizing the expenditure of an addi-

tional $10 million from the fire protection fund for fiscal years 2006 – 2008.

BE/yr