Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Cates
LAST UPDATED
ORIGINAL DATE 2/3/2025
SHORT TITLE Professional Recruitment & Retention Act
BILL
NUMBER House Bill 118
ANALYST Gygi
APPROPRIATION*
(dollars in thousands)
FY25 FY26
Recurring or
Nonrecurring
Fund
Affected
$0 $5,000.0 Recurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
DFA $0 $109.13 $106.0 $214.13 Recurring General Fund
NMMFA $0 $300.0 Indeterminate $300.0 Nonrecurring General Fund
Total $0 $409.13 $106.0 $515.13 Recurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Relates to LFC recommendation for FY26 fund transfers.
Sources of Information
LFC Files
Agency Analysis Received From
Executive Housing Office (HOA) Department of Finance and Administration (DFA)
Health Care Authority (HCA)
New Mexico Mortgage Finance Authority (NMMFA)
SUMMARY
Synopsis of House Bill 118
House Bill 118 (HB118), the Professional Recruitment and Retention Act, appropriates $5
million from the general fund to the Department of Finance and Administration (DFA) to
establish a professional recruitment and retention housing loan-for-service program within the
New Mexico Mortgage Finance Authority. Loans may be made for downpayments or closing
costs for purchase of a home in New Mexico by a licensed health care provider in exchange for
10 years of service in the state at 75 percent or more full-time employment. House Bill 118 – Page 2
The program includes the following key requirements:
• Loans cannot exceed 10 percent of the total home purchase price limit, as determined by
the authority.
• The loan will act as a lien on the property for 10 years. If the recipient fulfills the 10-year
work requirement as a licensed professional, the lien will be removed, and the loan
obligations will be considered met.
• A loan recipient who leaves the state before completing 10 years of service must pay
back the loan as follows: 0-5 years – 100 percent, 5-7 years – 50 percent, 7-10 years – 25
percent. All incur a 5.5 percent interest charge.
• Each professional may only receive one loan in a 10-year period.
The bill defines qualified professionals under Section D as individuals licensed in New Mexico
under the following categories:
• Registered nurse licensed pursuant to the Nursing Practice Act
• Dentist or dental hygienist licensed pursuant to the Dental Health Care Act
• Physician licensed pursuant to the Medical Practice Act
• Physician assistant licensed pursuant to the Physician Assistant Act
• Anesthesiologist assistant licensed pursuant to the Anesthesiologist Assistants Act
• Psychologist licensed pursuant to the Professional Psychologist Act
• Pharmacist licensed pursuant to the Pharmacy Act
• Occupational therapist licensed pursuant to the Occupational Therapy Act
• Physical therapist licensed pursuant to the Physical Therapy Act
• Respiratory care practitioner licensed pursuant to the Respiratory Care Act
• Speech-language pathologist or audiologist licensed pursuant to the Speech-Language
Pathology, Audiology and Hearing Aid Dispensing Practices Act
• Social worker licensed pursuant to the Social Work Practice Act
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
FISCAL IMPLICATIONS
The appropriation of $5 million contained in this bill is a recurring expense to the general fund.
Any unexpended or unencumbered balance remaining at the end of FY26 shall revert to the
general fund. Although HB118 does not specify future appropriations, establishing a new loan-
for-service program creates an expectation that the program will continue in future fiscal years;
therefore, this cost is assumed to be recurring.
New Mexico Mortgage Finance Authority (NMMFA) estimates the program would reach about
1,000 households. This estimate is based on the purchase price limit for NMMFA’s first
mortgage program for middle-income earners, which is about $568 thousand, and HB118’s loan
limit of 10 percent of purchase price, or $56.8 thousand per borrower. Further, the agency would
still need to meet its statutorily required leverage ratio of 3:1.
HB118 assigns NMMFA responsibility for rulemaking, program management, and reporting.
DFA will monitor the contract with NMMFA, manage fund distribution, monitor statutory
requirements, and track expenditures. The bill does not include an administrative fee allocation
for DFA or NMMFA, which will require additional staff and resources to implement, manage, House Bill 118 – Page 3
and oversee the program. DFA estimates a recurring annual cost for one program coordinator at
approximately $109 thousand. NMMFA estimates the operational cost of creating a new
downpayment assistance program at approximately $300 thousand, due to significant staff time
to conduct software implementation and train lenders.
SIGNIFICANT ISSUES
According to the executive’s Office of Housing, New Mexico is facing both a shortage of
licensed professionals and a rapidly rising cost of housing. This affordability crisis especially
effects the ability of lower-income licensed professionals to move to New Mexico or continue
practicing in the state. DFA notes that offering housing loan assistance could alleviate financial
barriers and incentivize professionals to commit to practicing in the state, which is crucial for
maintaining and strengthening public health and safety systems in underserved areas.
According to NMMFA, the proposed downpayment assistance program aligns with the
authority’s downpayment assistance and mortgage programs for second home purchases.
However, the new program has different forgiveness terms and a higher area median income
(AMI) limit. NMMFA’s first home program is funded with tax exempt bonds, so eligibility is
restricted to 120 percent AMI.
The Health Care Authority (HCA) states there will be no impact on Medicaid, although
presumably the recruited health care professionals would become Medicaid providers.
A 2008 LFC program evaluation of financial aid programs concluded that loan-for-service
programs are less cost-effective compared with loan repayment programs.
Loan-for-service
programs:
have greater administrative costs since program administrators need to track borrowers
over many years;
create greater financial risk for the state which must claw back the money should the
recipient not complete the terms of service; and
generate less demand than loan repayment programs.
The same LFC evaluation found other states are transitioning away from loan-for-service
programs and moving toward loan repayment programs.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
The LFC’s recommendation for FY26 fund transfers includes $50 million to the New Mexico
housing trust fund of the Mortgage Finance Authority to expand housing services, transitional
housing, and support those with behavioral health needs. These monies can be used for
downpayment assistance.
ALTERNATIVES
The executive Office of Housing suggests: 1) utilizing existing NMMFA and local government
downpayment assistance resources to serve these groups and strengthen outreach to targeted
licensed professionals and 2) expanding other recruitment programs like the educational loan
forgiveness programs to include non-clinical licensed social workers. House Bill 118 – Page 4
OTHER SUBSTANT IVE ISSUES
DFA notes that professionals who fail to meet the loan terms (e.g., leaving the state early,
reduced employment) must repay the loan at specified prorated penalties, which could deter
some participants. HB118 does allow loan forgiveness for extenuating circumstances such as
serious illness or incapacitation.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
There will not be an earmarked housing loan assistance program to recruit and retain health care
professionals to New Mexico.
KG/SR