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 Wirth
LAST UPDATED
ORIGINAL DATE 3/6/25
SHORT TITLE Articles of Incorporation Changes
BILL
NUMBER Senate Bill 388
ANALYST Hilla
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
SOS
No fiscal
impact
Indeterminate
but minimal
Indeterminate
but minimal
Indeterminate
but minimal
Recurring General Fund
Cost to Counties
No fiscal
impact
Indeterminate
but minimal
Indeterminate
but minimal
Indeterminate
but minimal
Recurring
Other state
funds
Parentheses ( ) indicate expenditure decreases. *Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
Secretary of State (SOS)
SUMMARY
Synopsis of Senate Bill 388
Senate Bill 388 (SB388) amends filing procedures for articles of incorporation for cooperative
associations, nonprofits, foreign and instate business, and associations and clubs. SB388 includes
provisions to invalidate articles of incorporation registrations and filings that include the name of
a non-existent or unaffiliated individual or an incorrect address. The bill shifts responsibility for
accepting and endorsing articles of incorporation from the Public Regulation Commission to the
Secretary of State (SOS). SOS is authorized to revoke invalid registrations and establishes a
misdemeanor penalty for filing documents with the invalid information.
The effective date of this bill is July 1, 2025.
FISCAL IMPLICATIONS
While a misdemeanor generally does not result in significant incarceration, individuals convicted
under this statute could face short-term detention, increasing county jail costs. The cost of
housing an individual in a county detention facility varies by jurisdiction but is estimated at
approximately $100 per day. Given that misdemeanor sentences rarely exceed six months and
are often resolved through fines or probation, the overall incarceration impact is expected to be
limited but nonzero. Senate Bill 388 – Page 2
The precise fiscal impact is difficult to quantify, as incarceration for misdemeanors is
discretionary and often depends on local enforcement and judicial practices. If enforcement
varies by county, some jurisdictions may see higher jail admissions than others, leading to
disparate fiscal impacts across the state. Additionally, any increase in criminal charges could
contribute to higher caseloads for courts, district attorneys, and public defenders, though these
costs are not included in this estimate due to the difficulty in determining their fiscal impact with
certainty.
Beyond direct incarceration costs, counties may experience administrative, and personnel costs
related to compliance, enforcement, and case adjudication resulting from this measure. However,
without clear data on enforcement levels, the extent of these costs remains indeterminate.
It is unlikely that this bill would pose any additional operating budget impact to SOS.
SIGNIFICANT ISSUES
SOS states that SB388 does not make similar changes to Limited Liability Corporations (LLC)
found in Article 19 of Chapter 53 NMSA 1978. SOS states that if the Legislature supports
SB388’s changes, it is recommended that the Legislature make similar changes to LCC statutory
provisions.
SOS points out that the bill does not allow for filers to make mistakes or errors on filings. SOS
suggests adding language to explicitly state that a person who knowingly files an invalid article
of corporation is guilty of a misdemeanor.
SOS assumed responsibility for the functions of the former Corporation’s Bureau of the Public
Regulation Commission pursuant to Chapter 75, Section 9, Laws 2013. SB388’s amendments
shifting this responsibility in statute align with previous statutory shifts from the commission to
SOS.
EH/hj/SL2