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
Sen. Muñoz/Rep. Vincent
LAST UPDATED
ORIGINAL DATE 2/7/2025
SHORT TITLE
Natural Disaster Loans & Fun
d
BILL
NUMBER Senate Bill 134/ec
ANALYST Davidson/Torres
APPROPRIATION*
(dollars in thousands)
FY25 FY26
Recurring or
Nonrecurring
Fund
Affected
$100,000.0 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
DHSEM
No fiscal
impact
$250.0 $250.0 $500.0 Nonrecurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
Energy, Minerals and Natural Resources Department (EMNRD)
Department of Homeland Security and Emergency Management (DHSEM)
New Mexico Attorney General (NMAG)
Agency Declined to Respond
State Investment Council (SIC) Department of Finance Administration (DFA)
SUMMARY
Synopsis of Senate Bill 134
Senate Bill 134 (SB134) appropriates $100 million from the general fund to natural disaster
revolving fund, which the bill creates, for the purpose of providing public assistance funding to
political subdivisions of the state that have been approved for federal public assistance funding
from the Federal Emergency Management Agency (FEMA) for a federally declared natural
disaster.
Senate Bill 134/ec – Page 2
The bill also amends sections of statute related to the appropriation contingency fund, requires
transfers from the appropriation contingency fund to the newly created natural disaster revolving
fund necessary to reach a balance of $100 million each year, defines state reserve funds, adds the
government results and opportunity fund to state reserves, and adds the newly created natural
disaster revolving fund to state reserves.
This bill contains an emergency clause and would become effective immediately on signature by
the governor.
FISCAL IMPLICATIONS
The appropriation of $100 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. From FY25 through FY28, the bill directs an appropriation from the
appropriation contingency fund to maintain a balance of $100 million in the newly created
natural disaster revolving fund. However, the bill also stipulates that any balance exceeding $100
million at the end of a fiscal year must revert to the appropriation contingency fund, while
simultaneously requiring a transfer from the appropriation contingency fund to restore the
revolving fund’s balance to $100 million. This conflicting language should be addressed to
ensure clarity and consistency in fund management; see Technical Issues for further details.
This bill establishes a new fund and provides for continuing appropriations. The LFC has
concerns regarding the inclusion of earmarks for up to $100 million for the revolving fund and
the continuing appropriation language included in the statutory provisions. These provisions
limit the Legislature’s ability to set spending priorities and allocate resources based on emerging
fiscal needs.
Senate Bill 134 amends statutory definitions of state reserve funds, introducing a centralized
classification where none previously existed. Currently, state statutes define reserves through
individual fund statutes rather than a single, cohesive framework. This bill designates the
government results and opportunity expendable trust and the newly created natural disaster
revolving loan fund as reserve funds.
Under existing law, the state will count the government results and opportunity expendable trust
as a reserve fund only for FY25. This bill makes that designation permanent, increasing reported
reserves by at least $500 million in FY26, depending on final revenues and spending decisions
made in the 2025 and 2026 legislative sessions. This would increase the total reserve percentage
by at least five percent. However, the fiscal impact of adding the natural disaster revolving loan
fund to the reserve calculation is uncertain due to conflicting statutory provisions governing fund
distributions. If the fund maintains a zero balance, its inclusion in the reserve calculation would
be unnecessary and would not contribute to the state’s bottom-line reserves.
Analysis from the Department of Homeland Security and Emergency Management (DHSEM)
notes in its table for estimated additional operating costs a sum of $250 thousand but does not
discuss or provide how the additional operating revenue would be utilized.
Senate Bill 134/ec – Page 3
SIGNIFICANT ISSUES
DHSEM notes that, currently, political subdivisions affected by natural disasters have to wait for
FEMA reimbursements, a process which can last months. Senate Bill 134 has the potential to act
as a bridge between recovery and reimbursement. Due to the complex nature of disaster
recovery, analysis from DHSEM notes timely access to funds is necessary to provide funding for
actions such as debris removal, infrastructure repair, and emergency services; while federal
funding is typically available for actions like these, funding is often delayed or difficult to
immediately spend.
Analysis from DHSEM notes the state’s most recent natural disaster event required up to $70
million in the first five days. While this cost was distributed across multiple entities, the total
alone shows how expensive natural disasters can be.
Analysis from the New Mexico Attorney General (NMAG) notes that, while the bill allows for
the Department of Finance Administration to work and consult DHSEM regarding loans, it does
not require it. This has the potential of requiring the courts to have to interpret the scope of
DHSEM and its role regarding awarding loans.
DHSEM analysis notes the bill specifies certain entities eligible for reimbursement but leaves
some out:
SB134 effectively targets communities that qualify for FEMA public assistance,
providing a financial bridge while awaiting federal reimbursements. However, its scope
does not extend to communities affected by disasters that do not meet federal declaration
thresholds, leaving some local governments without access to critical recovery funds.
Many incidents—such as wildfires, flash floods, and infrastructure failures—cause
significant hardship but will still fall short of FEMA's eligibility requirements. The bill
does not establish a mechanism to support these communities.
The New Mexico Constitution mandates a balanced budget, requiring the state to maintain
general fund reserves to offset potential shortfalls in revenue or unexpected expenditure
increases. These reserves serve as a safeguard to ensure fiscal stability and continuity of
government operations.
Best practices outlined by the Pew Charitable Trusts and the Volcker Alliance recommend that
reserve funds be highly liquid and subject to controlled obligations to ensure their effectiveness
in mitigating fiscal risk. Most of the funds designated as reserves in this bill meet these criteria.
However, the government results and opportunity expendable trust and the natural disaster
revolving loan fund do not adhere to these standards due to their significant distributions for
programmatic uses and appropriations.
Because these funds experience large inflows and outflows, their balances could fluctuate
substantially, leading to volatility in the state's reported reserves. This variability may create the
appearance of financial instability, potentially affecting the state’s creditworthiness as perceived
by bond rating agencies, bond buyers, and the public. Given the unpredictability of fund balances
and the absence of restrictions ensuring their availability solely for reserve purposes, these funds
do not align with national best practices for state reserve management.
Senate Bill 134/ec – Page 4
TECHNICAL ISSUES
Section 2 subsection D states unexpended and unencumbered balances at the end of the fiscal
year shall both revert to the appropriation contingency fund and be included in the calculation of
state reserves. If the balance is transferred to the appropriation contingency fund, the balance will
be zero and cannot be included in the calculation of reserves. Since there will be no balance and
the appropriation contingency fund is a state reserve fund, the sentence “any unexpended or
unencumbered balance remaining at the end of a fiscal year shall be included in the calculation
of state reserves” should be deleted.
Section 3 requires a transfer from the appropriation contingency fund to the natural disaster
revolving fund necessary to reach a balance of $100 million in the natural disaster revolving
fund. Because the revolving fund reverts to the appropriation contingency fund, the funds may
move back and forth with an unclear ending balance, dependent on when the Department of
Finance and Administration makes each transfer. Bill language should be clarified to identify
which transfer occurs first.
AD/hj/SL2