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
Herrera/Ortez/Hochman-
Vigil/Gonzales/Silva
LAST UPDATED
ORIGINAL DATE 2/7/2025
SHORT TITLE Drinking Water System Grants & Loans
BILL
NUMBER House Bill 240
ANALYST Carswell
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
No fiscal
impact
No fiscal
impact
Recurring
Other state
funds
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
New Mexico Finance Authority (NMFA) New Mexico Environment Department (NMED)
SUMMARY
Synopsis of House Bill 240
House Bill 240 (HB240), endorsed by the New Mexico Finance Authority Oversight Committee,
makes changes to the state’s Drinking Water State Revolving Loan Fund Act to conform with
the federal Safe Drinking Water Act. Among other revisions, the bill allows the New Mexico
Finance Authority (NMFA) to make grants as well as loans from the drinking water state
revolving loan fund, extends the maximum repayment periods for loans by 10 years, and clarifies
that NMFA, rather than the Environment Department (NMED) is responsible for annually
applying for federal capitalization grants for the revolving fund.
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
HB240’s revisions to the program’s enabling legislation will impact the terms under which
clients of the program are served but should not have a substantive impact on the administrative
duties performed by either NMFA or NMED. The revisions also do not change the required state
match to receive federal funds.
While HB240 makes explicit that grants are an eligible use of the funds, NMFA has already been House Bill 240 – Page 2
providing 100 percent principal forgiveness loans through the program to comply with Safe
Drinking Water Act requirements that certain federal funding be provided to eligible recipient on
grant-like terms.
SIGNIFICANT ISSUES
The drinking water state revolving fund receives annual capitalization grants from the federal
government that require a 20 percent state match. The fund supports projects that facilitate
access to clean drinking water, support compliance with drinking water standards, and protect
public health. The program is jointly administered by NMFA and NMED.
According to NMFA, New Mexico passed its Drinking Water State Revolving Loan Fund Act in
1997, made minor amendments in 2001, and has not revised the act since. Federal changes to the
Safe Drinking Water Act in 2018 and 2021 included changes to the financial assistance
requirements related to the state’s enabling legislation, resulting in the need to update the act to
support its compliance with federal law.
The changes would extend maximum loan repayment terms for non-disadvantaged communities
from 20 years to 30 years and for disadvantaged communities from 30 years to 40 years. This
change could result in smaller payments, reducing the financial burden of loans. The loan term is
not to exceed the design life of the funded project, however.
CC/hj/SL2