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 Murphy
/Mejia/Mason/Henry/Vincent
LAST UPDATED
ORIGINAL DATE 2/19/25
SHORT TITLE Storm Event Zero-Interest Loans
BILL
NUMBER House Bill 351
ANALYST Hilla
APPROPRIATION*
(dollars in thousands)
FY25 FY26
Recurring or
Nonrecurring
Fund
Affected $200,000.0 Nonrecurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Federal Emergency Management Agency
Agency Analysis was Solicited but Not Received From
Department of Finance and Administration (DFA)
Department of Homeland Security and Emergency Management (DHSEM)
New Mexico Counties (NMC)
Agency Declined to Respond
New Mexico Department of Environment (NMED)
SUMMARY
Synopsis of House Bill 351
House Bill 351 (HB351) appropriates $200 million from the general fund to the state Board of
Finance (BOF) at the Department of Finance and Administration (DFA) to provide zero-interest
loans to state political subdivisions in Chaves County that have been approved for federal public
assistance funding for projects to replace or repair public infrastructure damaged attributable to
the Chaves County flooding on October 19, 2024. The loan shall be repaid using dollars received
from federal funding.
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 $200 million contained in this bill is a nonrecurring expense to the general House Bill 351 – Page 2
fund. Any unexpended or unencumbered balance remaining at the end of FY27 shall revert to the
general fund. However, the timing of the repayments is subject to the timing and availability of
the approved federal funds. Any repayment of loans would be a nonrecurring increase to the
state’s revenue. Laws 2023, Chapter 2, created a similar loan repayment for the Hermits Peak-
Calf Canyon Fires, which contained a $100 million appropriation that has yet to be repaid to the
general fund. As of July 2024, only $703.6 thousand has been repaid to the general fund under
Laws 2023, Chapter 2. Due to various federal delays, the repayment of these loans in HB351 is
unlikely to be received within the next few fiscal years based on progress of similar previous
legislation. This indicates the FY27 reversion date would not be sufficient for projects to be
completed and receive repayments of loans before funds revert.
It is unclear how the figure of $200 million was set. The state has previously allocated a
maximum of $100 million for past fire recovery efforts. The slow loan repayments in similar
programs raises concerns about the long-term financial impact on the state.
SIGNIFICANT ISSUES
Laws 2023, Chapter 2, created a program similar to that in HB351 for damage connected to
Hermits Peak-Calf Canyon Fire in 2022, and Laws 2024, Chapter 1, created a $70 million
program for the Salt and South Fork fires from July 2024. These pieces of legislation were
passed to provide cash flow for political subdivisions to cover the costs of federally approved
projects. The intent of these programs is to allow political subdivisions to use state funds now to
pay for approved projects while they wait for federal funds they then use to pay back the state.
However, not all political subdivisions affected by these fires were appropriated funds for fire
recovery, possibly leading to further unmet and unseen needs in the state, which is a potential
possibility for HB351. Previous legislation required the Department of Homeland Security and
Emergency Management (DHSEM) to participate in award-making and project oversight, a
provision HB351 lacks.
On November 2, 2024, the federal government declared a disaster in New Mexico due to severe
storm and flooding on October 2024 in Chaves County, freeing up Federal Emergency
Management Agency (FEMA) funding for affected areas, including grants for temporary housing
and home repairs, low-cost loans to cover uninsured property losses, and other programs to help
individuals and business owners recover. The declaration states, “Federal funding also is
available to state, tribal and eligible local governments and certain private nonprofit
organizations on a cost-sharing basis for emergency work and the repair or replacement of
facilities damaged by the severe storm and flooding.” There are federal awards already set in
place; however, they are not zero-interest loans and are on a cost-sharing basis for political
subdivisions. FEMA would pay 75 percent of the project, and the political subdivisions would
pay the remaining 25 percent. As of January 28, 2025, seven projects are under review for the
federal cost-sharing.
As of January 28, 2025, FEMA states more than $24.6 million has been approved for federal
assistance for Chaves County for individuals, not for political subdivisions. FEMA’s deadline for
federal assistance is August 1, 2025. Additionally, the U.S. Department of Housing and Urban
Development (HUD) allocated $137 million in disaster recovery funding for Chaves County and
other impacts remaining from the Salt and South Fork fires that has yet to be distributed to the
local level. This is funneled through DHSEM.
House Bill 351 – Page 3
The bill’s language addresses debris removal, which would classify as Category A under
Emergency Work for FEMA approval. Previous legislation did not directly address emergency
work, or debris removal, which has created project delays for disaster recovery. This
identification of emergency work is critical to ensure a political subdivision can remove debris to
clear the way to make repairs.
ADMINISTRATIVE IMPLICATIONS
Based on previous analysis of similar legislation, DFA likely would require additional staff and
resources to manage the loan program.
TECHNICAL ISSUES
HB351 states the Board of Finance at DFA should administer the funds. This should be changed
to the Local Government Division. Laws 2024, Chapter 1, stated the $70 million would be
through the Board of Finance, but the department has been fulfilling the awarding process and
project management oversight through the Local Government Division due the governor’s veto
of language to go through the Board of Finance, consistent with Laws 2023, Chapter 2.
EH/hj/hg/sgs