[Congressional Record Volume 143, Number 31 (Wednesday, March 12, 1997)]
[Senate]
[Pages S2209-S2210]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DOMENICI (for himself and Mr. Bingaman):
  S. 430. A bill to amend the act of June 20, 1910, to protect trust 
funds of the State of New Mexico from erosion due to inflation and 
modify the basis on which distributions are made from those funds; to 
the Committee on Energy and Natural Resources.

[[Page S2210]]

      THE NEW MEXICO STATEHOOD AND ENABLING ACT AMENDMENTS OF 1997

  Mr. DOMENICI. Mr. President, I introduce legislation to amend the New 
Mexico Enabling Act of 1910. I am pleased to have as a cosponsor, my 
colleague from New Mexico, Senator Bingaman. I am also very pleased 
that identical legislation is being introduced today in the House by 
New Mexico's Representatives Skeen and Schiff.
  Mr. President, the Enabling Act of 1910 provided the people of the 
New Mexico with the authority to convene a State constitutional 
convention and to organize a State government. As was the case with 
almost every State west of the Mississippi River, New Mexico was also 
granted certain public domain lands to be held in trust for the 
purposes of supporting the State's public educational institutions.
  The New Mexico State Land Commissioner's office has a proud history 
of producing sustained revenues from these State trust lands. These 
revenues have served the public schools of our State as they were 
intended, by providing for investments in a permanent fund. Mandates 
for managing the trust lands to sustain the permanent fund, as well as 
the control of and distributions from the fund are a part of our State 
constitution. In order to amend the constitutional mandates related to 
the State trust lands and the permanent fund, the Enabling Act requires 
that Congress give its consent to the amendments. Today, we begin the 
process of allowing New Mexico greater flexibility for investment, and 
protection of the permanent fund from the effects of inflation.
  In New Mexico, the State Investment Council is charged with managing 
our State's permanent fund. The council is currently constrained by 
constitutional mandate, and the Enabling Act, from making certain types 
of investments that would have provided millions of additional dollars 
for our State's educational institutions over the past 20 years. 
Additionally, they are currently required to distribute, on an annual 
basis, the dividends and income from the permanent fund, regardless of 
the impacts of inflation on the value of its assets. This requirement 
has also cost the beneficiaries through periodic market value erosion 
of the fund's assets.
  Mr. President, the voters of New Mexico have spoken. On November 5, 
1996, 67 percent approved amendments to our State constitution that 
will improve the situation. These amendments give the State Investment 
Council the necessary flexibility to prudently invest the assets of the 
permanent fund. Additionally, they restrict the distribution of 
revenues to a fixed percentage of a rolling 5-year average market value 
of those assets.

  This proposal has broad bipartisan support in our State legislature, 
and from our Governor, Gary Johnson. At this point, I ask unanimous 
consent to submit for the record a letter of support signed by Governor 
Johnson, and the bipartisan leadership of the New Mexico House of 
Representatives and Senate.
  Mr President, the bill I am introducing today does two things. First, 
it amends the enabling act of 1910, so that it will be consistent with 
the investment flexibility and permanent fund protection clauses of the 
amendments to our State constitution, already approved by the voters of 
New Mexico. Second, it provides the legal requirement of congressional 
consent to the amendments, so that they can be implemented by our State 
government. Combined with the State constitutional amendments approved 
this past November, this bill will provide our State Investment Council 
with the authority to greatly improve their investment strategies, 
bringing them to par with the vast majority of other public and private 
endowed fund management authorities.
  In closing, Mr. President, I urge my colleagues to support this 
important legislation for the State of New Mexico, and I ask unanimous 
consent that the text of the bill be printed for the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 430

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PERMANENT TRUST FUNDS OF THE STATE OF NEW MEXICO.

       (a) Short Title.--This Act may be cited as the ``New Mexico 
     Statehood and Enabling Act Amendments of 1997''.
       (b) Investment of and Distributions From Permanent Trust 
     Funds.--The Act of June 20, 1910 (36 Stat. 557, chapter 310), 
     is amended--
       (1) in the proviso in the second paragraph of section 7, by 
     striking ``the income therefrom only to be used'' and 
     inserting ``distributions from which shall be made in 
     accordance with the first paragraph of section 10 and shall 
     be used'';
       (2) in section 9, by striking ``the interest of which only 
     shall be expended'' and inserting ``distributions from which 
     shall be made in accordance with the first paragraph of 
     section 10 and shall be expended''; and
       (3) in the first paragraph of section 10, by adding at the 
     end the following: ``The trust funds, including all interest, 
     dividends, other income, and appreciation in the market value 
     of assets of the funds shall be prudently invested on a total 
     rate of return basis. Distributions from the trust funds 
     shall be made as provided in Article 12, Section 7 of the 
     Constitution of the State of New Mexico.''.
       (c) Consent of Congress.--Congress consents to the 
     amendments to the Constitution of the State of New Mexico 
     proposed by Senate Joint Resolution 2 of the 42nd Legislature 
     of the State of New Mexico, Second Session, 1996, entitled 
     ``A Joint Resolution proposing amendments to Article 8, 
     Section 10 and Article 12, Sections 2, 4 and 7 of the 
     Constitution of New Mexico to protect the State's permanent 
     funds against inflation by limiting distributions to a 
     percentage of each fund's market value and by modifying 
     certain investment restrictions to allow optimal 
     diversification of investments'', approved by the voters of 
     the State of New Mexico on November 5, 1996.
                                                                    ____

                                           Office of the Governor,


                                                State Capitol,

                                  Santa Fe, NM, February 24, 1997.
     U.S. Senator Pete V. Domenici,
     Federal Place,
     Santa Fe, NM.
       Dear Senator Domenici: We hereby respectfully request the 
     U.S. Congress amend the Enabling Act for New Mexico. This 
     Amendment is necessary to protect the fund from inflation and 
     to reduce risk by diversifying investments and establishing a 
     distribution formula similar to that used by most other 
     endowments. The Legislature and 67% of the voters from New 
     Mexico voted in favor of amending Article 12, Sections 2, 4 
     and 7 of the New Mexico Constitution to accomplish these 
     objectives. Since these funds are derived from Federal land 
     granted to the State under the Enabling Act of 1910, it is 
     necessary to obtain the consent of the U.S. Congress before 
     the Amendment can be implemented. The Amendment can be 
     implemented without any cost to the Federal Government.
       The Amendment changes the method of making distributions to 
     the institutional beneficiaries (primarily public schools, 
     universities and other public institutions) to one based on a 
     fixed percentage (4.7%) of the five-year average market value 
     of the funds, instead of one based solely on interest and 
     dividend income. This method of making distributions should 
     ensure that the fund will grow with inflation, therefore 
     protecting the fund for future generations.
       Anything you can do to expedite the process of amending the 
     Enabling Act so that we can invest the State's Permanent 
     Funds more professionally and implement the new distribution 
     formula will be sincerely appreciated.
       Thank you for your help and support of this request.
           Very truly yours,
     Gary E. Johnson,
                                                         Governor.
     Raymond G. Sanchez,
                          Speaker of the House of Representatives.
     Kip W. Nicely,
              Minority Leader of the House of     Representatives.
     Manny M. Aragon,
                                       Pro Tempore, of the Senate.
     Raymond Kysar,
                                    Minority Leader of the Senate.
                                 ______