HB 71/a
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AN ACT
RELATING TO PUBLIC FINANCE; PROVIDING FOR FIFTY PERCENT OF
THE BALANCE OF THE EXCESS EXTRACTION TAXES SUSPENSE FUND THAT
EXCEEDS THE ANNUAL AVERAGE AMOUNT TO BE TRANSFERRED TO THE
BEHAVIORAL HEALTH TRUST FUND FOR THREE YEARS; INCREASING THE
AMOUNT THAT IS ANNUALLY TRANSFERRED TO THE EARLY CHILDHOOD
EDUCATION AND CARE PROGRAM FUND FROM THE EARLY CHILDHOOD
EDUCATION AND CARE FUND; PROVIDING FOR REPORTING OF
EXPENDITURES OF MONEY IN THE EARLY CHILDHOOD EDUCATION AND
CARE PROGRAM FUND; PROVIDING FOR FIFTY PERCENT OF THE MONEY
RECEIVED PURSUANT TO THE FEDERAL MINERAL LEASING ACT THAT
EXCEEDS THE ANNUAL AVERAGE AMOUNT TO BE DISTRIBUTED TO THE
MEDICAID TRUST FUND FOR THREE YEARS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 6-4-27 NMSA 1978 (being Laws 2020,
Chapter 3, Section 4, as amended) is amended to read:
"6-4-27. EXCESS EXTRACTION TAXES SUSPENSE FUND--
TRANSFER OF EXCESS OIL AND GAS EMERGENCY SCHOOL TAX REVENUE--
TAX STABILIZATION RESERVE--EARLY CHILDHOOD EDUCATION AND CARE
FUND--BEHAVIORAL HEALTH TRUST FUND--SEVERANCE TAX PERMANENT
FUND.--
A. The "excess extraction taxes suspense fund" is
created as a nonreverting fund in the state treasury. Money
in the fund shall only be used to make transfers by the HB 71/a
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department of finance and administration as required by this
section.
B. At the end of each fiscal year, the department
of finance and administration shall calculate and transfer
the balance of the fund attributable to that fiscal year as
follows:
(1) if in the current fiscal year the total
net receipts attributable to the tax imposed pursuant to
Section 7-31-4 NMSA 1978 and distributed pursuant to Section
7-1-6.20 NMSA 1978 exceed the annual average amount, the
department shall distribute the excess amount above the
annual average amount as follows:
(a) to the tax stabilization reserve,
the amount necessary to bring the balance of state reserves
to a level equal to twenty-five percent of the aggregate
recurring appropriations for that fiscal year from the
general fund, as determined by the department; provided that,
if the balance in the excess extraction taxes suspense fund
is not sufficient to meet that level, the entire balance
shall be transferred to the tax stabilization reserve; and
(b) the balance of the excess amount
above the annual average amount, if any, after the transfer
is made pursuant to Subparagraph (a) of this paragraph shall
be transferred as follows: 1) for fiscal years 2026 through
2028, fifty percent to the early childhood education and care HB 71/a
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fund and fifty percent to the behavioral health trust fund;
provided that if, as of the end of one of those fiscal years,
the balance of the early childhood education and care fund is
less than the balance of that fund as of the end of fiscal
year 2025, the transfer to the behavioral health trust fund
made pursuant to this item shall be decreased by an amount
equal to one-half of the difference between the balance of
the early childhood education and care fund as of the end of
fiscal year 2025 and the balance of that fund as of the end
of that fiscal year; and 2) for fiscal year 2029 and each
fiscal year thereafter, one hundred percent to the early
childhood education and care fund; and
(2) the remaining balance of the fund, if
any, shall be distributed to the severance tax permanent
fund.
C. As used in this section:
(1) "annual average amount" means the total
net receipts attributable to the tax imposed pursuant to
Section 7-31-4 NMSA 1978 and distributed pursuant to Section
7-1-6.20 NMSA 1978 in the immediately preceding five fiscal
years, divided by five; and
(2) "state reserves" means the general fund
balances, as determined by the department of finance and
administration, including all authorized revenues and
transfers to the general fund and balances in the HB 71/a
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appropriation contingency fund, the general fund operating
reserve, the state-support reserve fund and the tax
stabilization reserve."
SECTION 2. Section 9-29A-1 NMSA 1978 (being Laws 2020,
Chapter 3, Section 1, as amended) is amended to read:
"9-29A-1. EARLY CHILDHOOD EDUCATION AND CARE FUND.--
A. The "early childhood education and care fund"
is created within the state treasury. The fund shall consist
of distributions, appropriations, gifts, grants and
donations. Income from investment of the fund shall be
credited to the fund. Money in the fund shall be expended
only as provided in this section.
B. The state investment officer, subject to the
approval of the state investment council, shall invest money
in the early childhood education and care fund:
(1) in accordance with the prudent investor
rule set forth in the Uniform Prudent Investor Act; and
(2) in consultation with the state
treasurer.
C. The state investment officer shall report
quarterly to the legislative finance committee and the state
investment council on the investments made pursuant to this
section. Annually, a report shall be submitted no later than
October 1 each year to the legislative finance committee, the
revenue stabilization and tax policy committee and any other HB 71/a
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appropriate interim committees.
D. On July 1 of each year, a distribution shall be
made from the early childhood education and care fund to the
early childhood education and care program fund in an amount
equal to the greater of five percent of the average of the
year-end market values of the fund for the immediately
preceding three calendar years or five hundred million
dollars ($500,000,000).
E. In addition to the distribution pursuant to
Subsection D of this section, money in the early childhood
education and care fund may be expended in the event that
general fund balances, including all authorized revenues and
transfers to the general fund and balances in the general
fund operating reserve, the appropriation contingency fund,
the tobacco settlement permanent fund, the state-support
reserve fund and the tax stabilization reserve, will not meet
the level of appropriations authorized from the general fund
for a fiscal year. In that event, to avoid an
unconstitutional deficit, the legislature may appropriate
from the early childhood education and care fund to the
general fund only in the amount necessary to meet general
fund appropriations for that fiscal year and only if the
legislature has authorized transfers from the appropriation
contingency fund, the general fund operating reserve, the tax
stabilization reserve and the tobacco settlement permanent HB 71/a
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fund that exhaust those fund balances."
SECTION 3. Section 9-29A-2 NMSA 1978 (being Laws 2020,
Chapter 3, Section 2, as amended) is amended to read:
"9-29A-2. EARLY CHILDHOOD EDUCATION AND CARE PROGRAM
FUND.--
A. The "early childhood education and care program
fund" is created in the state treasury. The fund consists of
distributions, appropriations, gifts, grants, donations and
income from investment of the fund. The early childhood
education and care department shall administer the fund.
Money in the fund is subject to appropriation by the
legislature for early childhood education and care services
and programs. Expenditures from the fund shall be by warrant
of the secretary of finance and administration pursuant to
vouchers signed by the secretary of early childhood education
and care or the secretary's authorized representative. Any
unexpended or unencumbered balance in the fund at the end of
a fiscal year shall revert to the early childhood education
and care fund.
B. By November 1 of each year beginning in 2025,
the state auditor shall report to the legislative finance
committee on each expenditure of money in the fund, including
the date, recipient and purposes for which the money was
expended."
SECTION 4. Section 9-29A-3 NMSA 1978 (being Laws 2020, HB 71/a
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Chapter 3, Section 3, as amended) is amended to read:
"9-29A-3. DISTRIBUTION--EARLY CHILDHOOD EDUCATION AND
CARE FUND--MEDICAID TRUST FUND--SEVERANCE TAX PERMANENT
FUND--PAYMENTS PURSUANT TO FEDERAL MINERAL LEASING ACT.--
A. If, by June 30 of each fiscal year, the net
receipts for that fiscal year of the money received by the
state pursuant to the federal Mineral Leasing Act exceed the
annual average amount, the excess amount above the annual
average amount shall be distributed as follows and attributed
to that fiscal year:
(1) for fiscal years 2026 through 2028:
(a) fifty percent to the early
childhood education and care fund and fifty percent to the
medicaid trust fund; provided that
(b) if, as of the end of one of those
fiscal years, the balance of the early childhood education
and care fund is less than the balance of that fund as of the
end of fiscal year 2025, the distribution to the medicaid
trust fund made pursuant to Subparagraph (a) of this
paragraph shall be decreased by an amount equal to one-half
of the difference between the balance of the early childhood
education and care fund as of the end of fiscal year 2025 and
the balance of that fund as of the end of that fiscal year;
and
(2) for fiscal year 2029 and each fiscal HB 71/a
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year thereafter, one hundred percent to the early childhood
education and care fund.
B. If, by June 30, 2025, and by June 30 of each
fiscal year thereafter, the remaining amount of the net
receipts for that fiscal year of the money received by the
state pursuant to the federal Mineral Leasing Act after the
distribution pursuant to Subsection A of this section exceeds
the threshold amount, the excess shall be distributed to the
severance tax permanent fund.
C. The department of finance and administration
shall make the calculations to determine if excess amounts
shall be distributed pursuant to this section. If there is
an excess amount, the distribution shall be made as soon as
practicable. If there is not an excess amount, no
distribution shall be made.
D. As used in this section:
(1) "annual average amount" means the total
net receipts attributable to money received by the state
pursuant to the federal Mineral Leasing Act in the
immediately preceding five fiscal years, divided by five; and
(2) "threshold amount" means the net
receipts of the money received by the state pursuant to the
federal Mineral Leasing Act distributed in fiscal year 2024
pursuant to Subsection B of Section 22-8-34 NMSA 1978."
SECTION 5. CONTINGENT EFFECTIVE DATE.--The provisions HB 71/a
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of Section 4 of this act shall become effective upon Senate
Bill 88 or similar legislation creating a "medicaid trust
fund" of the first session of the fifty-seventh legislature
becoming law; provided that if Senate Bill 88 or similar
legislation does not take effect by July 1, 2025, the
provisions of Section 3 of this act shall not take effect.
SECTION 6. EFFECTIVE DATE.--The effective date of the
provisions of Sections 1 and 2 of this act is July 1, 2025.