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SENATE BILL 162
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Pete Campos
FOR THE LEGISLATIVE FINANCE COMMITTEE
AN ACT
RELATING TO THE SEVERANCE TAX PERMANENT FUND; CHANGING THE
AMOUNT OF THE FUND TO BE INVESTED IN NEW MEXICO PRIVATE EQUITY
FUNDS OR NEW MEXICO BUSINESSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-27-5.15 NMSA 1978 (being Laws 1990,
Chapter 126, Section 5, as amended) is amended to read:
"7-27-5.15. NEW MEXICO PRIVATE EQUITY FUNDS AND NEW
MEXICO BUSINESS INVESTMENTS.--
A. [In addition to the investments required by
Subsections F and G of this section ] No more than [eleven
percent of the market value ] seven hundred million dollars
($700,000,000) of the severance tax permanent fund may be
invested in New Mexico private equity funds or New Mexico
businesses under this section.
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B. In making investments pursuant to Subsection A
of this section, the council shall make investments in New
Mexico private equity funds or New Mexico businesses whose
investments or enterprises enhance the economic development
objectives of the state.
C. The state investment officer shall make
investments pursuant to Subsection A of this section only upon
approval of the council and within guidelines and policies
established by the council.
D. As used in this section:
(1) "New Mexico business" means, in the case
of a corporation or limited liability company, a business with
its principal office and a majority of its full-time employees
located in New Mexico or, in the case of a limited partnership,
a business with its principal place of business and eighty
percent of its assets located in New Mexico; and
(2) "New Mexico private equity fund" means an
entity that makes, manages or sources potential investments in
New Mexico businesses and that:
(a) has as its primary business activity
the investment of funds in return for equity in or debt of
businesses for the purpose of providing capital for start-up,
expansion, product or market development, recapitalization or
similar business purposes;
(b) holds out the prospects for capital
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appreciation from such investments;
(c) has at least one full-time manager
with at least three years of professional experience in
assessing the growth prospects of businesses or evaluating
business plans;
(d) is committed to investing or helps
secure investing by others, in an amount at least equal to the
total investment made by the state investment officer in that
fund pursuant to this section, in businesses with a principal
place of business in New Mexico and that hold promise for
attracting additional capital from individual or institutional
investors nationwide for businesses in New Mexico; and
(e) accepts investments only from
accredited investors as that term is defined in Section 2 of
the federal Securities Act of 1933, as amended (15 USCA Section
77(b)), and rules and regulations promulgated pursuant to that
section, or federally recognized Indian tribes, nations and
pueblos with at least five million dollars ($5,000,000) in
overall investment assets.
E. The state investment officer is authorized to
make investments in New Mexico businesses to create new job
opportunities and to support new, emerging or expanding
businesses in a manner consistent with the constitution of New
Mexico if:
(1) the investments are made:
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(a) in conjunction with cooperative
investment agreements with parties that have demonstrated
abilities and relationships in making investments in new,
emerging or expanding businesses;
(b) in a New Mexico aerospace business
that has received an award from the United States government or
one of its agencies or instrumentalities: 1) in an amount, not
less than one hundred million dollars ($100,000,000), that is
equal to at least ten times the investment from the severance
tax permanent fund; and 2) for the purpose of stimulating
commercial enterprises; or
(c) in a New Mexico business that: 1)
is established to perform technology transfer, research and
development, research commercialization, manufacturing,
training, marketing or public relations in any field of science
or technology, including [but not limited to ] energy, security,
defense, aerospace, automotives, electronics,
telecommunications, computer and information science,
environmental science, biomedical science, life science,
physical science, materials science or nanoscience, using
research developed in whole or in part by a state institution
of higher education or a prime contractor designated as a
national laboratory by an act of congress that is operating a
facility in the state, or an affiliated entity; and 2) has an
agreement to operate the business on state lands;
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(2) an investment in any one business does not
exceed ten percent of the amount available for investment
pursuant to this section; and
(3) the investments represent no more than
fifty-one percent of the total investment capital in a
business; provided, however, that nothing in this subsection
prohibits the ownership of more than fifty-one percent of the
total investment capital in a New Mexico business if the
additional ownership interest:
(a) is due to foreclosure or other
action by the state investment officer pursuant to agreements
with the business or other investors in that business;
(b) is necessary to protect the
investment; and
(c) does not require an additional
investment of the severance tax permanent fund.
F. [In addition to the investments required by
Subsections A and G of this section ] The state investment
officer shall make a commitment to the small business
investment corporation pursuant to the Small Business
Investment Act to invest two percent of the market value of the
severance tax permanent fund to create new job opportunities by
providing capital for land, buildings or infrastructure for
facilities to support new or expanding businesses and to
otherwise make investments to create new job opportunities to
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support new or expanding businesses in a manner consistent with
the constitution of New Mexico. On July 1 of each year, the
state investment officer shall determine whether the invested
capital in the small business investment corporation is less
than two percent of the market value of the severance tax
permanent fund. If the invested capital in the small business
investment corporation equals less than two percent of the
market value of the severance tax permanent fund, further
commitments shall be made until the invested capital is equal
to two percent of the market value of the fund.
G. [In addition to the investments provided for in
Subsections A and F of this section ] The state investment
officer shall make a commitment to the New Mexico finance
authority to invest five hundred million dollars ($500,000,000)
of the severance tax permanent fund in investments made
pursuant to the Small Business Recovery and Stimulus Act;
provided that:
(1) investments made pursuant to and in
compliance with the Small Business Recovery and Stimulus Act
shall be deemed to be in compliance with the prudent investor
rule set forth in the Uniform Prudent Investor Act; and
(2) the New Mexico finance authority shall not
be held liable for investments made pursuant to this subsection
that do not provide a return on investment that is comparable
to other differential rate investments made pursuant to the
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Severance Tax Bonding Act.
H. The state investment officer shall report
semiannually on the investments made pursuant to this section.
Annually, a report shall be submitted to the legislature prior
to the beginning of each regular legislative session and a
second report no later than October 1 each year to the
legislative finance committee, the revenue stabilization and
tax policy committee and any other appropriate interim
committee. Each report shall provide the amounts invested in
each New Mexico private equity fund, as well as information
about the objectives of the funds, the companies in which each
private equity fund is invested and how each private equity
investment enhances the economic development objectives of the
state. Each report also shall provide the amounts invested in
each New Mexico business."
SECTION 2. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2025.
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