NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB579

SOURCES OF INFORMATION

LFC Files

SUMMARY

Synopsis of Bill

In his State-of-the-State address, the Governor announced a policy to increase accountability in state government, ". . . I am proposing a 'Sunset Commission' review every rule and regulation, every board and commission, and every program and agency for consideration for elimination." By creating a new "Sunset Act", House Bill 721 is an effort to enact the Governor's policy goal.

House Bill 721, primarily, would enact five substantial provisions, applicable to all non-constitutionally created state entities (agencies, boards, commissions, advisory committees, task forces, and joint power agreement agencies):

• Create a ten-member Sunset Commission who would be required to perform sunset reviews of state entities;
• Require state entities to review and update its rules every year for submission, with an annual report, to the Sunset Commission;
• Define termination dates for state entities as either July 1, 2001 or 2002;
• Provide for re-authorization or elimination of state entities by the Legislature; and
• Repeal relevant statutes including the existing Sunset Act.




House Bill 721 does not apply to state entities, which are created by the Constitution of the State of New Mexico, such as the judiciary or elected offices. The proposed "Sunset Commission" itself would be subject to termination on July 1, 2004.





Significant Issues





A "Sunset Act" already exists (Sections 12-9-11 to 12-9-22 NMSA 1978). In fact, House Bill 721 was written directly from the existing Sunset Act, with the deletion of one section and addition of four new sections. The two primary differences between the existing statute and House Bill 721 follow:

1. Existing statute applies generally to agencies whose mission is to license and regulate certain industries or functions whereas House Bill 721 would apply to all state agencies.

2. Existing statute places the sunset review responsibility with the Legislative Finance Committee (LFC), who perform the review of certain agencies every two years, whereas House Bill 721 creates an entirely new Sunset Commission.





As mentioned, under current statutes, the Governor already has the authority to create advisory committees (Section 9-1-9 NMSA 1978) and the Legislature already performs sunset reviews of state entities with licensing functions. Additionally, the Governor can implement any number of controls (administrative, performance, or financial) on state entities as a matter of policy, rather than enacting a statute or creating a new bureaucracy such as a Sunset Commission. Moreover, it is the Legislature's constitutionally granted role to create, re-authorize, oversee, and eliminate any state agency not created by the Constitution.





Sunset Commission. House Bill 721 would create a new commission, the Sunset Commission. The purpose of the commission would be to examine and evaluate the effectiveness of state agencies in serving the public good, then to provide the legislature a recommendation on whether the entity should be continued or eliminated. Almost half of the states in the union have enacted similar legislation as a measure to increase the accountability of state government. Most of these states place the responsibility with the legislature. In fact, the states of Colorado and Texas have created Sunset Advisory Committees, as partnerships between the executive and legislative branches of government, to evaluate state government effectiveness.





House Bill 721 is quite different from these models and from the existing Sunset Act in that it does not form an equitable partnership between the executive and legislative branches. To clarify, according to House Bill 721, the makeup and leadership of the ten-member Sunset Commission follows:





Executive Branch

1.0 voting member Lieutenant Governor, serve as Chairman

1.0 voting member Appointed by Secretary of DFA, serve as Executive Director

4.0 voting members Appointed by the Governor

6.0 members





Legislative Branch

1.0 voting member Appointed by the Speaker of the House

1.0 voting member Appointed by House Minority Leader

1.0 voting member Appointed by Senate Pro Tem

1.0 voting member Appointed by Senate Minority Leader

4.0 members

The bill subordinates the Legislature to the executive branch, by allowing the Governor to have a greater vote, through appointed membership, on the Sunset Commission. In addition, the Lieutenant Governor serves as the Chairman of the Commission and the appointee from the DFA will serve as the Executive Director. Politically, the Governor will control the Sunset Commission by an even greater disparity, 8 votes to 2 votes, unless, of course, the Governor hails from a third political party.





FISCAL IMPLICATIONS





House Bill 721 does not contain an appropriation. However, enactment would have a substantial fiscal impact, at a minimum, $260.0 of general fund appropriation.





The bill would require appropriation for three items: 1) Commission Member In-state Travel and Per Diem, 2) administration and management agency rules and annual reports, and 3) publication of agency rules for public notification and in the state register. In-state travel and per diem costs will depend on the frequency with which the Sunset Commission meets. However, using the LFC budget hearing process as a baseline, the estimate would be approximately $40.0 (assumptions: a ten-member commission meeting for 10 days). Yet, ten days is and extremely conservative estimate.





For the second item, House Bill 721 specifically requires agencies to review its rules annually, and submit copies of those rules to the Sunset Commission. This requirement duplicates a process that already exists in the State Rules Division of the Commissioner of Public Records. The division employs 3.5 FTE and spends approximately $220.0 for annual operations. Accordingly, the Sunset Commission, at a minimum, would require this same staff and appropriation, and more than likely, would require additional funding because it will be asked to perform more intensive analysis than what is performed by the State Rules Division.





Finally, it is difficult to estimate what cost would be imposed on the state agencies to comply with House Bill 721. The State Rules Division reports the it houses 25,000 pages of current rules for state agencies. House Bill 721 would require revision of these rules annually, thus necessitating publication of any change in rules in general circulation newspapers. It would be safe to say that agencies publication costs would double, which would impact regulatory agencies the hardest.





ADMINISTRATIVE IMPLICATIONS





Almost every state agency has indicated that enactment of House Bill 721 would significantly impact its operations. The agency would be required to develop new presentations on its operations, educate commission members about its statutory mission, and devote significant amounts of staff time to reviewing its rules, which is a task agencies complete every three years under existing statutes.





CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP





House Bill 721 duplicates Senate Bill 579. It conflicts with the existing Sunset Act. The bill relates to numerous bills that would seek accountability in government, such as performance-based budgeting (Senate Bill 111) or the creation of a governmental accounting office (Senate Bill 363).





TECHNICAL ISSUES





There are numerous technical issues with the House Bill 721. Most notable, the bill places the State Department of Education on a July 1, 2002 termination date. The department is created by the Constitution and cannot be eliminated, and as such, the bill is unconstitutional. Additionally, in its repeal section, in many cases the bill does not delete the appropriate statute to achieve its objective. Because House Bill 721 appears to have been written directly from the existing Sunset Act, it is inconsistent with the bill's original intent. For instance, the original Sunset Act applies primarily to regulatory agencies. However, the bill requires the Sunset Commission to evaluate all agencies as if each were a regulatory agency. Finally, in certain cases, the bill eliminates boards or commissions which serve as advisors to cabinet agency programs, before eliminating the cabinet agency. As an analogy, the effect of this oversight could be compared to a private company eliminating its board of directors, before the company.





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