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SENATE BILL 167
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Michael Padilla
AN ACT
RELATING TO EARLY CHILDHOOD FUNDING; TRANSFERRING THE BALANCE
OF THE EARLY CHILDHOOD EDUCATION AND CARE FUND TO THE EARLY
CHILDHOOD TRUST FUND; RECOMPILING AND AMENDING CERTAIN EARLY
CHILDHOOD FUNDS; EXPANDING THE PURPOSES FOR WHICH MONEY IN THE
FUNDS MAY BE USED TO INCLUDE PRENATAL PROGRAMS AND SERVICES;
PROVIDING AN EFFECTIVE DATE CONTINGENT ON APPROVAL OF A
CONSTITUTIONAL AMENDMENT CREATING THE EARLY CHILDHOOD TRUST
FUND.
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 ]
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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 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) to the early childhood [education
and care] trust fund, the balance of the excess amount above
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the annual average amount, if any, after the transfer is made
pursuant to Subparagraph (a) of this paragraph; 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 appropriation
contingency fund, the general fund operating reserve, the
state-support reserve fund and the tax stabilization reserve."
SECTION 2. Section 9-29A-3 NMSA 1978 (being Laws 2020,
Chapter 3, Section 3, as amended) is recompiled as Section
6-4-27.1 NMSA 1978 and is amended to read:
"6-4-27.1. DISTRIBUTION--EARLY CHILDHOOD [EDUCATION AND
CARE] 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
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annual average amount, the excess amount above the annual
average amount shall be distributed to the early childhood
[education and care] trust fund and attributed to that fiscal
year.
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
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Subsection B of Section 22-8-34 NMSA 1978."
SECTION 3. Section 9-29A-1 NMSA 1978 (being Laws 2020,
Chapter 3, Section 1, as amended) recompiled as Section 6-4-34
NMSA 1978 and is amended to read:
"6-4-34. EARLY CHILDHOOD [EDUCATION AND CARE ] TRUST
FUND.--
A. The early childhood [education and care ] trust
fund [is created within the state treasury. The fund ] created
by Article 20, Section 23 of the constitution of New Mexico
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 ] authorized by Article 20, Section
23 of the constitution of New Mexico .
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 ]
secretary of early childhood education and care .
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
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October 1 each year to the legislative finance committee, the
revenue stabilization and tax policy committee and any other
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 [two hundred fifty million
dollars ($250,000,000) ] 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 ] the
current 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
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has authorized transfers from the appropriation contingency
fund, the general fund operating reserve and the tax
stabilization reserve [and the tobacco settlement permanent
fund] that exhaust those fund balances."
SECTION 4. Section 9-29A-2 NMSA 1978 (being Laws 2020,
Chapter 3, Section 2, as amended) is recompiled as Section
6-4-35 NMSA 1978 and is amended to read:
"6-4-35. EARLY CHILDHOOD [EDUCATION AND CARE ] PROGRAM
FUND.--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
prenatal programs and services and for early childhood
[education and care services and ] programs and services for
children until they are eligible for kindergarten .
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 ] trust
fund."
SECTION 5. TEMPORARY PROVISION.--The balance of the early
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childhood education and care fund shall be transferred to the
early childhood trust fund.
SECTION 6. CONTINGENT EFFECTIVE DATE.--The provisions of
this act shall become effective upon certification by the
secretary of state that the constitution of New Mexico has been
amended as proposed by a joint resolution of the first session
of the fifty-seventh legislature entitled "PROPOSING TO ADD A
NEW SECTION 23 OF ARTICLE 20 OF THE CONSTITUTION OF NEW MEXICO
TO CREATE THE EARLY CHILDHOOD TRUST FUND TO BE USED EXCLUSIVELY
FOR PRENATAL AND EARLY CHILDHOOD PROGRAMS AND SERVICES, EXCEPT
WHEN STATE FUNDS WILL NOT MEET PREVIOUSLY AUTHORIZED
EXPENSES.".
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