SANTA FE – New Mexico’s largest permanent fund would continue to grow by rates higher than inflation even if more money were to be diverted from the fund for early childhood programs, according to a study issued Tuesday by proponents of the legislation.
Specifically, the study, conducted by a Puerto Rico-based consulting firm, found the Land Grant Permanent Fund would grow in size by an annual average of 5.5 percent over the next 10 years if the change was adopted.
“The fund will grow, and we will have better-educated and healthier New Mexicans,” said Vicente Feliciano, whose firm was commissioned to perform the study by Albuquerque-based St. Joseph Community Health.
However, Senate Finance Committee Chairman John Arthur Smith, D-Deming, a fiscal conservative who has drawn the ire of advocates as a critic of the early childhood spending measure, said he wasn’t swayed by the report.
“This guy who they portray as an expert, I’ve never heard of him,” Smith said in an interview.
Meanwhile, a separate State Investment Council analysis of the proposed constitutional amendment, Senate Joint Resolution 12, said it could force the investment body to make more aggressive, and potentially riskier, investment decisions.
While it would mean $258 million in additional distributions in the 2017 budget year, less money could be available in future years, the SIC analysis also claimed.
“… This proposal greatly increases the risk that the LGPF will be unable to deliver equal or greater benefits in the future, to the General Fund and other (permanent fund) beneficiaries,” the SIC analysis said.
A key assumption in the outside study unveiled Tuesday was including the value of the state’s trust lands into the analysis of the proposed amendment, which was not done in the SIC analysis. The study done for the advocates estimated the value of those lands – which total 9 million acres above ground and 13 million acres of subsurface mineral rights – at between $6.2 billion to $6.4 billion.
Meanwhile, the Land Grant Permanent Fund had a balance of $13.1 billion as of Tuesday, according to the SIC.
The proposed constitutional amendment would, if approved, increase annual diversions from the permanent fund – from 5.5 percent of a rolling average of the fund’s balance to 7 percent – and earmark some of that money for early childhood programs. The increased distributions would be halted if the fund’s value dipped below a set level.
The measure, which is sponsored by Senate Majority Leader Michael Sanchez, D-Belen, is expected to be voted on today in the Senate Rules Committee.
If endorsed in that committee, the proposal would then move on to the Senate Finance Committee, where it died last year.
Smith would not say Tuesday when – or if – the measure would be brought up for a vote in his committee, but predicted it will not pass during this year’s 30-day legislative session.
“There’s not enough votes to get it out of finance (committee) even if I put it up,” Smith told the Journal .