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SENATE BILL 397
57TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 2025
INTRODUCED BY
Antonio Maestas and Leo Jaramillo
AN ACT
RELATING TO PUBLIC BENEFITS; ENACTING THE NEW MEXICO NEXT
GENERATION ACT; CREATING THE NEXT GENERATION TRUST FUND AND
PROVIDING FOR INVESTMENT OF THAT FUND BY THE STATE INVESTMENT
OFFICER; CREATING THE BABY BONDS FUND AND REQUIRING THE
DEPARTMENT OF FINANCE AND ADMINISTRATION TO PROMULGATE RULES
FOR ADMINISTRATION OF THAT FUND AND THE NEW MEXICO NEXT
GENERATION ACT; PROVIDING THAT BENEFITS SHALL NOT BE GUARANTEED
AND THAT A PROPERTY INTEREST SHALL NOT BE CREATED BY THE NEW
MEXICO NEXT GENERATION ACT; EXEMPTING FROM THE STATE INCOME TAX
ANY MONEY SPENT FOR BENEFICIARIES PURSUANT TO THE NEW MEXICO
NEXT GENERATION ACT; REQUIRING INFORMATION SHARING WITH THE
DEPARTMENT OF FINANCE AND ADMINISTRATION; MAKING
APPROPRIATIONS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1
through 9 of this act may be cited as the "New Mexico Next
Generation Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the
New Mexico Next Generation Act:
A. "beneficiary" means a person born in New Mexico
on or after July 1, 2025 who:
(1) has a parent who has resided in New Mexico
for at least five consecutive years immediately preceding the
person's birth; or
(2) while under the age of eighteen, is
placed:
(a) in the care and custody of the
protective services division of the children, youth and
families department either under the legal authorization of the
Children's Code or through a voluntary placement agreement
signed by the person's parent or legal guardian; or
(b) with a licensed child placement
agency under the authority of the Child Placement Agency
Licensing Act;
B. "educational expenses" means tuition and fees,
student housing, school supplies or other related expenses for
a public post-secondary educational institution or for
vocational training through apprenticeship and training
programs in New Mexico that are recognized by the office of
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apprenticeship of the employment and training administration of
the United States department of labor, the state apprenticeship
office of the workforce solutions department or the
apprenticeship council;
C. "eligible expenditure" means an expenditure on
behalf of a beneficiary for educational expenses or for a down
payment to purchase a residence in New Mexico that is made in
accordance with New Mexico law and rules promulgated by the
department of finance and administration; and
D. "parent" means a biological or adoptive parent
of a child whose parental rights have not been terminated.
SECTION 3. [NEW MATERIAL] NEW MEXICO NEXT GENERATION
PROGRAM--ELIGIBILITY--CLAIM.--A beneficiary who is between
eighteen and forty years of age and who has successfully
completed a financial literacy course approved by the state
treasurer may submit a claim to the department of finance and
administration for that department to make an eligible
expenditure on behalf of the beneficiary. The claim shall be
on forms and in the manner prescribed by that department.
SECTION 4. [NEW MATERIAL] NEXT GENERATION TRUST FUND.--
A. The "next generation trust fund" is created as a
nonreverting fund in the state treasury. The purpose of the
fund is to establish and grow a source of funding to distribute
to the baby bonds fund. The next generation trust fund
consists of distributions, transfers, appropriations, gifts,
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grants, donations, bequests and income from investment of the
fund. The state investment officer shall invest money in the
fund in accordance with the prudent investor rule set forth in
the Uniform Prudent Investor Act and in consultation with the
state treasurer. Earnings from investment of the fund shall be
credited to the fund. Money in the fund is subject to
appropriation by the legislature and shall be expended only as
provided for in the New Mexico Next Generation Act.
B. On July 1, 2043 and each July 1 thereafter, a
distribution shall be made from the next generation trust fund
to the baby bonds fund in an amount, to be determined by the
department of finance and administration in consultation with
the state investment officer, based on the number of
beneficiaries that will become eligible and the anticipated
eligible expenditures that will be made in that fiscal year. A
determination of the distribution amount shall take into
account the balance of and projected earnings and expenditures
from the baby bonds fund.
SECTION 5. [NEW MATERIAL] BABY BONDS FUND.--
A. The "baby bonds fund" is created in the state
treasury. The purpose of the baby bonds fund is to establish
for beneficiaries a resource for educational and housing
assistance, while simultaneously supporting the state's
economic development and well-being. The fund consists of
distributions made to the fund from the next generation trust
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fund and other distributions, transfers, appropriations, gifts,
grants, donations, bequests and income from investment of the
fund. Money in the fund is appropriated to the department of
finance and administration to make eligible expenditures on
behalf of beneficiaries pursuant to the New Mexico Next
Generation Act. The department of finance and administration
shall administer the fund, and expenditures from the fund shall
be by warrant of the secretary of finance and administration
pursuant to vouchers signed by the secretary or the secretary's
authorized representative.
B. By May 1, 2043 and on each May 1 thereafter, the
department of finance and administration, in consultation with
the department of health and the children, youth and families
department, shall project the amount of eligible expenditures
required for the upcoming fiscal year and provide its
projection to the state investment officer.
SECTION 6. [NEW MATERIAL] INFORMATION SHARING.--On or
after July 1, 2025, the vital records and health statistics
bureau of the department of health and the children, youth and
families department shall enter into an agreement with the
department of finance and administration to provide to the
department of finance and administration any information
necessary to determine or verify the identity or number of
beneficiaries that may be eligible for assistance pursuant to
the New Mexico Next Generation Act. The vital records and
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health statistics bureau of the department of health and the
children, youth and families department shall provide to the
department of finance and administration any information that
is required pursuant to that agreement.
SECTION 7. [NEW MATERIAL] RULEMAKING BY DEPARTMENT OF
FINANCE AND ADMINISTRATION.--The department of finance and
administration shall promulgate rules necessary for the
administration of the baby bonds fund and the New Mexico Next
Generation Act. The rules shall include requirements for:
A. determining a person's status as a beneficiary;
B. determining whether a proposed expenditure on
behalf of a beneficiary constitutes an eligible expenditure;
C. an accounting of benefits available to
individual beneficiaries; and
D. any other procedures necessary for
administration of the baby bonds fund and the New Mexico Next
Generation Act.
SECTION 8. [NEW MATERIAL] NO GUARANTEE OF BENEFITS OR
ENFORCEABLE INTEREST.--The provisions of the New Mexico Next
Generation Act do not guarantee any benefits and shall not be
construed to create an interest in property that is enforceable
under state law or that does not otherwise exist.
SECTION 9. [NEW MATERIAL] DESIGNATED BENEFICIARY'S
ELIGIBILITY FOR NEED-BASED ASSISTANCE.--Except as provided by
federal law, money in the next generation trust fund and the
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baby bonds fund shall not be considered an asset for the
purposes of determining a beneficiary's eligibility for
need-based public assistance programs, grants or aid.
SECTION 10. A new section of the Income Tax Act is
enacted to read:
"[NEW MATERIAL] EXEMPTION--NEW MEXICO NEXT GENERATION
ACT.--
A. Money expended on behalf of a beneficiary
pursuant to the New Mexico Next Generation Act is exempt from
state income taxation.
B. As used in this section, "beneficiary" means a
person born in New Mexico on or after July 1, 2025 who:
(1) has a parent who has resided in New Mexico
for at least five consecutive years immediately preceding the
person's birth; or
(2) while under the age of eighteen, is
placed:
(a) in the care and custody of the
protective services division of the children, youth and
families department either under the legal authorization of the
Children's Code or through a voluntary placement agreement
signed by the person's parent or legal guardian; or
(b) with a licensed child placement
agency under the authority of the Child Placement Agency
Licensing Act."
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SECTION 11. A new section of the Children's Code is
enacted to read:
"[NEW MATERIAL] INFORMATION SHARING PURSUANT TO NEW MEXICO
NEXT GENERATION ACT.--Nothing in the Children's Code shall be
deemed to prohibit the department from providing to the
department of finance and administration any information
necessary to assist in the determination or verification of the
identity or number of beneficiaries that may be eligible for
assistance pursuant to the New Mexico Next Generation Act."
SECTION 12. APPROPRIATIONS.--
A. Five hundred million dollars ($500,000,000) is
appropriated from the general fund to the next generation trust
fund for expenditure in fiscal year 2026 and subsequent fiscal
years for the purposes of the next generation trust fund. Any
unexpended or unencumbered balance remaining at the end of a
fiscal year shall not revert to the general fund.
B. One hundred thousand dollars ($100,000) is
appropriated from the general fund to the department of finance
and administration for expenditure in fiscal year 2026 and
subsequent fiscal years for administering the New Mexico Next
Generation Act. Any unexpended or unencumbered balance
remaining at the end of a fiscal year shall not revert to the
general fund.
SECTION 13. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2025.
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