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 Szczepanski/Roybal Caballero
LAST UPDATED
ORIGINAL DATE 2/2/2025
SHORT TITLE NMFA Local Solar Access Fund
BILL
NUMBER House Bill 128
ANALYST Carswell
APPROPRIATION*
(dollars in thousands)
FY25 FY26
Recurring or
Nonrecurring
Fund
Affected $60,000.0 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
NMFA
No fiscal
impact
$650.0 $500.0 $1,150.0 Recurring
Other state
funds
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Relates to House Bill 2 and Senate Bills 48 and Senate Bill 49
Sources of Information
LFC Files
Agency Analysis Received From
New Mexico Finance Authority (NMFA) Energy, Minerals and Natural Resources Department (EMNRD)
Public Regulation Commission (PRC)
SUMMARY
Synopsis of House Bill 128
House Bill 128 (HB128) appropriates $60 million from the general fund to the Energy, Minerals
and Natural Resources Department (EMNRD) for the New Mexico Finance Authority (NMFA)
to carry out the purposes of the local solar access fund. The bill creates the local solar access
fund as a non-reverting fund within NMFA. Money in the fund is to be used to make grants to
counties, municipalities, school districts, land grants-mercedes, and Indian nations, tribes, and
pueblos in New Mexico to plan, design, construct, purchase, install, and equip solar energy
systems to power buildings and infrastructure. The fund may also be used for grants for technical House Bill 128 – Page 2
assistance to seek federal funding for the same purposes related to solar energy and to pay
NMFA’s administrative costs.
The bill directs NMFA to work with EMNRD to establish rules to guide the grant program by
December 31, 2025, and specifies the method of prioritizing solar energy systems shall include
consideration of applicants’ financial need to complete the project, percentage of low-income
households in the community served by the solar system, long-term savings on operating costs,
solar energy systems that support workforce development, buildings and infrastructure used to
provide community services, and other criteria. The bill specifies that the majority of funding
shall be allocated to rural eligible entities.
The effective date of this bill is contingent upon an appropriation to the New Mexico Finance
Authority for administrative costs being enacted in the 2025 General Appropriation Act.
FISCAL IMPLICATIONS
The appropriation of $60 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 not revert to the
general fund. Although HB128 does not specify future appropriations, establishing a new grant
program could create an expectation the program will continue in future fiscal years; therefore,
costs to the general fund are likely to recur at some future date, though not annually.
NMFA estimates the annual cost of administering the new grant program at approximately $500
thousand, with some additional upfront cost in the first year for program development.
SIGNIFICANT ISSUES
HB128’s definition of “solar energy system” includes equipment used to generate, convert, store,
manage, and monitor solar energy and may include energy storage systems, such as batteries, to
retain, store, and deliver electrical energy. Analysis submitted by the Public Regulation
Commission (PRC) indicates additional energy storage will be required in the near future to
continue incorporating more solar energy into the electric grid. This is because solar energy
production is intermittent, fluctuating based on the time of day and weather, which is a challenge
for grid stability and balancing energy production with consumption. PRC analysis further notes
that battery storage that can be deployed by grid operators helps overcome these challenges. The
agency suggests grant prioritization criteria could include programs that include storage systems,
especially those that can be deployed by grid operators.
ENMRD analysis indicates the entities that would be eligible for funding through the local solar
access fund may have difficulty accessing capital to develop their own solar systems but that a
grant program is likely to increase the number of solar installations serving low-income and rural
communities. According to EMNRD, approximately a quarter of households in New Mexico are
considered “energy burdened,” meaning they spend 6 percent or more of their income to cover
energy costs. The agency estimates the appropriation in HB128 could support 800 to 1,000 small
commercial solar projects or 12 to 20 utility-scale projects.
The bill does not specify whether applicants should seek other sources of financial support,
including loan programs or federal funds, before pursuing the state grants. House Bill 128 – Page 3
ADMINISTRATIVE IMPLICATIONS
EMNRD notes its responsibility for the new grant program could slow its work on its existing
programs without additional FTE. However, the bill assigns most administrative responsibility
for the fund to NMFA. While EMNRD will likely have to collaborate with NMFA in an ongoing
manner for the duration of the program, its technical expertise will likely be required more
during the program development phase and its workload may diminish in later years. The bill
does not specify whether the two agencies are to collaborate in making awards from the fund on
an ongoing basis.
NMFA’s administrative costs are allowed to be covered from the local solar access fund.
Because it is a grant rather than a loan program, additional appropriations from the Legislature
would be required to continue the program after the initial $60 million is expended.
NMFA notes, regarding HB128’s contingent effective date, that:
“NMFA is not a budgeted entity. Typically, NMFA covers its administrative costs …
from interest earned on the investment of unexpended proceeds. If these earnings are
insufficient to cover administrative expenses, then NMFA will recapture its expenses
from principal and interest payments from loans made and from the corpus of the funds
for grant programs. …Section 1(C) allows NMFA to cover the costs of its administration
from the fund, making Section 3 unnecessary. Currently, NMFA expects the costs of
administration to not exceed 2 percent of the $60 million appropriation.”
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
HB128 relates to House Bill 2 (HB2) because its effective date is contingent on an appropriation
that does not exist in the introduced version of HB2.
HB128 relates to Senate Bill 48 (SB48), which appropriates $340 million from the general fund
to a newly created community benefit fund. The fund has similar general purposes of increasing
renewable power generation. Senate Bill 49, a companion bill that makes distributions to state
agencies from the $340 million in SB48, would distribute $100 million to the grid modernization
grant fund, whose purpose overlaps in some respects with the new fund.
CC/sgs/SL2