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
Reps. Garratt, Lundstrom, Brown, and De
La Cruz/Sen. Padilla
LAST UPDATED
ORIGINAL DATE 2/10/2025
SHORT TITLE
Public-Private Partnerships Fund &
Program
BILL
NUMBER House Bill 276
ANALYST Carswell
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
Up to
($6,700.0)
Up to
($6,700.0)
Up to
($6,700.0)
Up to
($6,700.0)
Nonrecurring
Drinking
Water State
Revolving
Loan Fund
Up to
($3,700.0)
Up to
($3,700.0)
Up to
($3,700.0)
Up to
($3,700.0)
Nonrecurring
Clean Water
State
Revolving
Loan Fund
Up to
($2,000.0)
Up to
($2,000.0)
Up to
($2,000.0)
Up to
($2,000.0)
Nonrecurring
Local
Government
Planning
Fund
Up to
($5,000.0)
Up to
($5,000.0)
Up to
($5,000.0)
Up to
($5,000.0)
Nonrecurring
Cultural
Affairs
Facilities
Infrastructure
Fund
Parentheses ( ) indicate revenue 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
$100.0 $100.0 $200.0 Recurring
Other state
funds
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Relates to House Bill 41 and Senate Bill 206
Sources of Information
LFC Files
Agency Analysis Received From
Economic Development Department (EDD) New Mexico Finance Authority (NMFA) House Bill 276 – Page 2
Agency Analysis Solicited But Not Received From
Department of Finance and Administration (DFA)
SUMMARY
Synopsis of House Bill 276
House Bill 276 (HB276) creates the public-private partnership fund as a non-reverting fund in
the state treasury and the public-private partnership program to be administered by the Local
Government Division of the Department of Finance and Administration (DFA). The bill tasks the
local government division with evaluating and providing grants to broadband and transportation
projects, in consultation with the New Mexico Finance Authority (NMFA). HB276 specifies
issues to be evaluated by DFA before awarding grants, including cost-benefit analyses of the
public-private partnership compared to a traditional public project; a determination of whether
procurement rules normally applicable to the public partner would delay or increase the cost of
the project; other financing available; and the likelihood of the project’s completion.
Additionally, DFA is to prioritize broadband projects that support service expansion measured
by the number of private and commercial properties that would receive service or the need to
develop, repair, replace, or maintain public facilities or infrastructure that provide internet. DFA
is to prioritize transportation projects based on whether the project is necessary to maintain
transportation infrastructure and is currently delayed due to cost or procurement issues. DFA is
to develop rules for the program and NMFA is to evaluate the financial risk of proposed projects
and develop any necessary rules for recommending projects to DFA.
HB276 makes the public-private partnership fund a potential beneficiary of annual
appropriations from the public project revolving fund and exempts broadband and transportation
projects funded through the program from the Procurement Code.
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
Under existing state law, there are seven funds to which the Legislature may annually
appropriate up to 35 percent of the annual revenues to the public project revolving fund from
governmental gross receipts tax. The eligible beneficiaries are: the clean water state revolving
loan fund; drinking water state revolving loan fund; cultural affairs facilities infrastructure fund;
local government planning fund; rural infrastructure revolving loan fund; solid waste facility
grant fund; and the water and wastewater project grant fund.
Most funds that are eligible for public project revolving fund appropriations do not receive them
on a regular basis. Over the last three fiscal years, a total of $13 million to $14 million has been
appropriated to between three and four of the authorized beneficiaries. The three to four funds
have maxed out the capacity for public project revolving fund appropriations within statutory
limits. According to NMFA, the public project revolving fund received $38.1 million in public
project revolving fund in FY24, up to $13.3 million of which would be eligible for appropriation
by the 2025 Legislature to the eligible funds.
House Bill 276 – Page 3
If HB276 is enacted and the Legislature subsequently chooses to capitalize the new public-
private partnership fund with appropriations from the public project revolving fund, it could
negatively impact the other authorized funds or require general fund appropriations to those
funds. HB276 does not contain an appropriation to the new fund, so these impacts are dependent
on future legislative action.
Public Project Revolving Fund Appropriations, FY23 - FY25 (in thousands)
Fund FY23 FY24 FY25
Drinking Water State Revolving Loan Fund $6,720 $3,500 $6,000
Clean Water State Revolving Loan Fund $2,500 $3,700 $0
Local Government Planning Fund $0 $2,000 $2,000
Cultural Affairs Facilities Infrastructure Fund $5,000 $5,000 $5,000
Source: LFC files
The public project revolving fund appropriations to the drinking water and clean water state
revolving funds provide state match for annual federal grants to those funds. The local
government planning fund provides planning grants and has served as a project pipeline for the
water trust board in recent years. The cultural affairs facilities infrastructure fund supports capital
projects at museums and historic sites statewide.
The responsibility HB276 assigns to NMFA to evaluate the risk of proposed projects is likely to
involve analysis outside the agency’s current expertise, according to NMFA, and would require
contracting outside expertise. Additionally, NMFA notes there is likely to be significant demand
for the program since it would represent the only exemption for public-private partnerships from
the procurement code. The operating budget impact could therefore be significant but would
depend on funding to the program and the number and complexity of projects seeking funding
through it. This analysis assumes that NMFA will need at least one additional FTE at a recurring
cost of approximately $100 thousand.
NMFA notes any appropriations from the public project revolving fund reduce its lending
capacity and revenues pledged to its bondholders.
SIGNIFICANT ISSUES
Public-private partnerships allow public owners to leverage private sector resources, expertise,
and project delivery methods to develop infrastructure that yields public benefits. Analysis
submitted by NMFA states that public-private partnerships are complex project delivery
transactions involving project agreements, which are long-term contracts to finance the projects
that align public and private interests and balance risk and return.
Competitive procurement is a gold standard by which governments ensure that public funds are
being put to good use. Competitive procurement, wherein the government solicits goods or
services and then reviews and compares proposals from potential sellers, gives the state the
information it needs to make informed choices to do business with those that offer the best
quality, price and value. Because of the value competitive procurement brings to the
government, several reports from the New Mexico Office of the State Auditor, the LFC's House Bill 276 – Page 4
Program Evaluation Unit, and the National Association of State Procurement Officials have
highlighted the hazards of government reliance on exemptions from competitive procurement.
By providing a new exemption to the procurement code, HB276 introduces a hazard that the
state could overspend on goods or services or that it will choose services without a full picture of
the quality and value on offer.
The Office of Broadband Access and Expansion (OBAE) is responsible for developing a
statewide broadband plan, identifying broadband funding opportunities, and applying for federal
and non-governmental broadband funding. Projects should likely be developed in coordination
with the office. A 25 percent local match is required for projects financed with the $675 million
in federal BEAD funds the office is responsible for deploying in the state. It is unclear whether
funds from the new public-private partnership fund could be used to cover the match.
NMFA notes:
While HB276 provides the opportunity for an appropriation to be made from the public
project revolving fund to the public-private partnerships fund, it does not contain an
actual appropriation. It is therefore difficult for NMFA to estimate the cost of fulfilling its
duties. Further, HB276 provides that NMFA may recover its administrative costs from
the public-private partnerships fund. However, if the public-private partnerships fund
receives an appropriation of severance tax bond (STB) proceeds, this reimbursement
provision would conflict with the STB’s prohibition of paying agency administrative
costs.
Should insufficient funding be available to appropriate from the public project revolving
fund to the [current beneficiaries], those programs would not have adequate resources to
meet funding needs of critical water and other infrastructure projects.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
HB276 relates to Senate Bill 206, which makes several changes to the state’s Procurement Code,
including for public-private partnerships.
HB276 relates to House Bill 41, which appropriates $13.3 million from the public project
revolving fund in FY25 for the drinking water state revolving fund, local government planning
fund, and cultural affairs facilities infrastructure fund.
TECHNICAL ISSUES
NMFA states analyzing the risks of public-private partnerships projects is likely to require
information a private partner would consider confidential or proprietary but the bill does not
exempt such information from inspection of public records requests.
NMFA also notes the bill appears to contain conflicting language exempting the projects from
the procurement code but requiring DFA to determine whether procurement rules should apply.
CC/rl