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Government royalty revenue-distribution-2. |
08LSO-0400.L1 |
FISCAL NOTE
Diversion of Federal Mineral Royalties (FMRs) over the $200 million cap from the School Foundation Program (SFP) to a local government infrastructure account. Investment income on local government infrastructure account.
Assumptions:
The above estimates are based January 2008 CREG projections.
This bill creates a new diversion of over-the-cap FMRs normally distributed to the SFP to a local government infrastructure account of $100 million in FY09 and $100 million in FY10. This new diversion would only take place after the current diversion of FMRs to the Hathaway student scholarship account and the higher education endowment has reached its maximum combined total of $505.0 million. The Hathaway student scholarship account and the higher education endowment are projected to reach their maximum balances in FY08, based on January 2008 CREG projections.
Similar to the current diversion to the Hathaway student scholarship account and the higher education endowment, these proposed diversions would be reduced as necessary to ensure an unencumbered balance of $100 million in the SFP as of July 1 of each fiscal year. CRITICAL ASSUMPTION: The above estimates assume diversions would not need to be reduced to maintain the $100 million SFP balance.
Any interest earned on the proposed Local Government Infrastructure Account shall be deposited into an expenditure account. It is assumed these funds would be invested in the State Agency Pool, which would receive investment earnings at a rate of 4.86% per year, based on January 2008 CREG projections. It is assumed that funds from this diversion would be available for investment in the fiscal year following the year of diversion. The State Loan and Investment Board shall recommend for inclusion in the Governor's Annual budget local government infrastructure projects to be funded from the proposed expenditure account.
Prepared by: Dean Temte,LSO Phone: 777-7881