Pub. 15 2018 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S Issue 1 • 2018 9 Budget The principal task of the legislature in short 30 day session is to pass a balance budget. The Legislature had a pleasant surprise before the 2018 Legislature that due to an upswing in oil revenues in the Southeast New Mexico, the state had ap - proximately $300 million in new money. The Legislature did not go on a spending spree but rather restored the state reserves to 10% ($632 million) and backfiled many of the pockets of money raided to balance prior year budgets (2016 and 2017). Land Grant Permanent Fund There were at least 6 proposed Consti - tutional Amendments introduced to tap the $17 billion Land Grant Permanent Fund for Early Childhood Education at an estimated cost of $150 million per year. No details were submitted on how money would be spent. Opponents argued that once the Fund begins to be invaded, the precedent is set and it will be difficult to say no to other equally important needs. One thing that is certain, this fight is far from over. State Bank HM 17 called for creation of task force to study the establishment of a state bank, and a report back to legisla - ture by November 1, 2018. There have been several states and municipalities which have considered the creation of a governmental bank, including the city of Santa Fe. Only North Dakota has a state bank-established in 1919. One of the new arguments for creating a state bank is to provide services to the marijuana industry as a number of states including California and Maine are explor - ing the creation of a state marijuana bank. Issues that were raised in committee testimony on HJM 17: • How would a state bank be in - sured? NM law requires a bank to be insured. To be licensed by FID, a bank must show that insurance on deposit has been obtained from FDIC or other appropriate agency of the US government. • The deposits in the Bank of North Dakota are not FDIC-insured, but deposits are guaranteed by the full faith and credit of the state. Would New Mexico be willing to guarantee deposits as is done in North Dakota? • As we all know, U.S. banks are ac - tively supervised by the Chartering authority. FDIC, OCC, FID. Who would regulate a state or municipal bank? An independent regulator must have power to seek corrective measures through final enforce - ment actions including civil money penalties and removal of officers and directors. • State bank would likely become the state’s fiscal agent and potentially all government funds (municipal, county, school district, higher education institutions) would flow through the state bank and poten - tially reduce a private bank’s ac - cess to local government deposits. Uniform Guardianship, Conser- vatorship and Other Protective Arrangements Act The final version of the bill, which seemed to change shape during each committee hearing, makes a variety of changes to existing state law, but does not enact the new uniform act as orig - inally intended. The bill opens guard - ianship and conservatorship hearings to the public, requires notice of hearings to close family members, restricts the power of guardians to limit visitation by family members or to change the provisions of a power of attorney, and requires that all professional conserva - tors post a bond. There is one provision in the new law which is most troubling. Section 45-5- 409.1 provides: “45-5-409.1. WAIVER OF LIABILITY-- A. No person shall request, procure or receive a release or waiver of liability, however denominated, of a conservator, an agent, an affiliate or a designee of a conservator or any other third party acting on behalf of a conservator. B. A release or waiver of liability that is requested, procured or re - ceived contrary to the provisions of Subsection A of this section is void.” This section is concerning to those who provide professional fiducia - ry and investment management services, and who are accustomed to obtaining releases of liability after reporting to the court. Consequent - ly, we recommend that one exam - ines the ongoing and continuous liability that will necessarily accom - pany any future conservatorship appointments in New Mexico. The bank should consider consulting with counsel in making the deter - mination as to whether to continue to accept appointments to serve as conservator in light of the new provision. Cannabis SJR 4 would have amended the state constitution to allow possession and personal use of cannabis for persons 21 years or older. The resolution did not pass as many legislators argued that the legalization issue did not belong in the state constitution. Twenty-nine states have legalized medical marijuana, including New Mexico and eight states have legalized adult use of recreation - al marijuana. Many legislators have suggested that 2019 may well be the year that New Mexico enacts legalization of adult use, pointing at the Colorado experience. In Colorado, 2017 total mar - ijuana sales were $1.5 billion of that total $1.09 billion from adult recreational use and $416 million from medical marijua - na. Colorado collected $247 million in taxes and fees from marijuana sales. Crime There is probably no greater prob - lem affecting economic development in NM than the crime wave we currently face. The Legislature enacted a 90-page bill addressing criminal justice and law enforcement Included in the bill: • Increased penalties for violent felons with firearms; • $40 million for security upgrades at schools; • Establishes database to help re - cover stolen vehicles to be used by salvage yards and auto recyclers; • Arrange treatment for inmates struggling with mental illness or addiction after release from jail; • More funding for courts, judges and prosecutors. n