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

SPONSOR Cisneros

ORIGINAL DATE

LAST UPDATED

2/3/06

HB

SHORT TITLE Water Project Financing Authorization

SB 637

ANALYST Lewis/Kehoe

REVENUE (dollars in thousands)

Estimated Revenue

FY06

FY07

FY08

Recurring

or Non-Rec

Fund

Affected

($28,500.0)

Non-Recurring Severance Tax

Bond Capacity

28,500.0

Non-Recurring Water Project

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates House Bill 683.

Relates to

HB 132, HB 134, HB 272, HB 296, HB 499, HJM 21, HJR 6, SB 93, SB 194, SB 224

and SB 301.

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Finance Authority (NMFA)

SUMMARY

Synopsis of Bill

Senate Bill 637, with emergency clause, authorizes the New Mexico finance authority to make

loans or grants from the water project fund to the following political subdivisions for the follow-

ing qualifying projects on terms and conditions established by the water trust board and the New

Mexico finance authority:

A.

to the Anthony water and sanitation district in Dona Ana county for a water project;

B.

to the city of Bloomfield in San Juan county for a water project;

C.

to the city of Carlsbad in Eddy county for a water project;

D.

to the Carnuel mutual domestic water and wastewater consumers association in Bernalillo

county for a water distribution project;

E.

to the Ciudad soil and water conservation district in Bernalillo county for a watershed res-

toration and management project;

Senate Bill 637– Page

2

F.

to the Claunch-Pinto soil and water conservation district in Torrance county for a water-

shed restoration and management project;

G.

to the village of Columbus in Luna county for a water distribution project;

H.

to Cuatro Villas mutual domestic water consumers association in Santa Fe county for a re-

gional water project;

I.

to the Dona Ana mutual domestic water consumers association in Dona Ana county for a

water project;

J.

to the eastern New Mexico rural water authority in Curry county for a water distribution

project;

K.

to El Rito mutual domestic water and sewer association in Rio Arriba county for a water

distribution project;

L.

to El Prado water and sanitation district in Taos county for a water distribution project;

M.

to El Valle de los Ranchos water and sanitation district in Taos county for a water distribu-

tion project;

N.

to the city of Elephant Butte in Sierra county for a wastewater treatment and collection pro-

ject;

O.

to the greater Chimayo mutual domestic water consumers association in Rio Arriba and

Santa Fe counties for a water distribution project;

P.

to Guadalupe county for a water distribution project;

Q.

to the city of Las Vegas in San Miguel county for a water distribution project;

R.

to the city of Lordsburg in Hidalgo county for a water project;

S.

to Los Alamos county for a water project;

T.

to the Mora mutual domestic water and sewer association in Mora county for a water dis-

tribution project;

U.

to the northwest New Mexico council of governments in McKinley county for a water dis-

tribution project;

V.

to the Pueblo of Pojoaque in Santa Fe county for a water project;

W.

to the Rio Chama acequia association in Rio Arriba county for a water distribution project;

X.

to Santa Fe county for a water distribution project;

Y.

to the Sangre de Cristo water division of the city of Santa Fe in Santa Fe county for a water

distribution project;

Z.

to the Pueblo of Santo Domingo in Sandoval county for a watershed restoration and man-

agement project;

AA.

to the south side water users association, Flora Vista water users association and Northstar

mutual domestic water consumers association in San Juan county for regional water pro-

jects;

BB.

to the town of Taos in Taos county for a wastewater treatment project;

CC.

to the Ute Creek soil and water conservation district in Harding county for a watershed res-

toration and management project; and

DD.

to Agua Madres in Sandoval county for a water distribution project.

FISCAL IMPLICATIONS

Laws 2003 (Chapter 134) requires the Board of Finance to authorize and issue bonds for 10 per-

cent of the severance tax bonding capacity each year for deposit in the water project fund. The

10 percent set-aside of severance tax bond capacity for FY06-07 will provide approximately

$28.5 million to the water project fund for eligible water projects. Money from the severance tax

bonds may not be used to pay indirect project costs, and any unexpended balance from proceeds

Senate Bill 637– Page

3

of severance tax bonds issued for a water project shall revert to the severance tax bonding fund

within six months of completion of the water project. NMFA is responsible for monitoring and

ensuring proper reversions. The value of the 10 percent of severance tax bond capacity can

change from year to year depending on oil and gas revenues.

Eligible water projects are defined as those involving: 1) the storage, conveyance or delivery of

water to end-users; 2) the implementation of federal Endangered Species Act collaborative pro-

grams; 3) the restoration of watersheds; 4) flood prevention; 5) conservation; or 6) for recycling,

treatment or reuse of water. In 2005, the Act was amended to add the category of “water rights

adjudication” to provide automatic fund in an amount equal to 10 percent of the annual distribu-

tion to the water project fund. Following the 2005 Legislative Session, prior to the sale of sever-

ance tax bonds, it was determined the severance tax bonds could not be used for administrative

purposes. Therefore, the Office of State Engineer and Administrative Office of the Courts did

not receive money for adjudication purposes from the water project fund in 2005.

SIGNIFICANT ISSUES

According to the New Mexico Finance Authority (NMFA), the Water Trust Board (WTB) re-

ceived 69 letters of interest, requesting a total of $97.2 thousand from the 2006 annual distribu-

tion to the Water Project Fund. After reviewing the letters, the WTB invited 30 complete appli-

cations from local qualified entities for these projects. The total amount requested for these 30

projects is $55.95 million. The amount of the 2006 distribution is currently estimated to be ap-

proximately $25.5 million.

The WTB requests legislative authorization for the 30 projects which have been submitted for

consideration. After the 2006 legislative session adjourns, the WTB will review all projects au-

thorized by the Legislature for funding from the 2006 distribution to the Water Project Fund.

RELATIONSHIP

According to the NMFA, HB 134, HB 296 and SB 93 are duplicates which appropriate $100 mil-

lion from the General Fund to the Water Trust Fund for expenditure in FY06 and subsequent fis-

cal years to carry out the purposes of the Water Project Finance Act.

SB 194 essentially duplicates the intent of HB 134, HB 296 and SB 93 but is written to provide

that “$100 million of the nonrecurring revenue of the general fund remaining at the end of fiscal

year 2006 shall be transferred to the water trust fund”.

HB 272 transfers $100 million from the General Fund to the Water Project Fund for distribution

pursuant to law after January 1, 2007. This bill is a companion bill to House Joint Resolution 6.

HJR 6 proposes a Constitutional Amendment (CA) to be approved by the voters in the 2006 gen-

eral election which would establish the Water Trust Fund in the Constitution. HJR 6 is contain-

gent upon enactment into law during the current legislature session of a bill which transfers $100

million to the Water Trust Fund. This CA is a companion bill to HB 272.

HB 499 appropriates $100 million from the General Fund to the Water Trust Fund for expendi-

ture in FY06 and subsequent fiscal years for purposes of the Water Project Finance Act. This

bill also amends the Water Project Finance Act to provide that money in the Water Trust Fund

Senate Bill 637– Page

4

shall not revert at any time.

HB 132 amends the Water Project Finance Act to provide that money in the Water Trust Fund

“shall not revert” at any time.

SB 224 amends the Water Project Finance Act to delete the provision that 10% of all Water Pro-

jest Funds shall be dedicated to water rights adjudication.

HJM 21 requests the Legislative Council to appoint a Task Force to assess options for creating a

continuing funding mechanism for the Water Trust Fund.

SB 301 authorizes the issuance and sale of General Obligation Bonds for a wide variety of capi-

tal projects throughout the State. The bill appropriates $20.0 million to the Water Project Fund

to carry out the provisions of the Water Project Finance Act. SB 301 requires the approval of the

voters in the 2006 general election.

ML/LMK/nt