STATE INVESTMENT OFFICER AND FUND CHANGES

HB0121

HOUSE BILL 121

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Sarah Silva

FOR THE LEGISLATIVE FINANCE COMMITTEE

AN ACT

RELATING TO PUBLIC FINANCE; STANDARDIZING LANGUAGE IN FUNDS
MANAGED BY THE STATE INVESTMENT OFFICER; AMENDING DEFINITIONS
IN CHAPTER 6, ARTICLE 8 NMSA 1978; REMOVING THE STATE
INVESTMENT OFFICER AS THE INVESTMENT MANAGER IN CERTAIN FUNDS;
REMOVING THE TOBACCO SETTLEMENT PERMANENT FUND AND THE STATE-SUPPORT RESERVE FUND FROM CALCULATIONS MADE IN CERTAIN FUNDS;
MOVING THE CAPITAL DEVELOPMENT PROGRAM FUND TO THE STATE
TREASURY, EXPANDING WHAT CAN BE FUNDED TO CERTAIN PHASES OF A
CAPITAL PROJECT, LOWERING THE CAP ON PLANNING AND DESIGN AND
REDUCING THE AMOUNT OF TIME THAT MONEY IN THE FUND WILL REVERT
BY ONE YEAR; REDUCING THE AMOUNT OF TIME THAT UNRESERVED AND
UNDESIGNATED FUNDS OF STATE AGENCIES WILL REVERT BY ONE MONTH;
CLARIFYING THE USE OF UNAPPROPRIATED MONEY IN CERTAIN FUNDS;
REPEALING AN OUTDATED SECTION OF CHAPTER 6, ARTICLE 8 NMSA
1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
Section 6-4-9 NMSA 1978 (being Laws 1999,
Chapter 207, Section 1, as amended) is amended to read:

"6-4-9. TOBACCO SETTLEMENT PERMANENT FUND--INVESTMENT--DISTRIBUTION.--

A. The "tobacco settlement permanent fund" is
created
as a nonreverting fund
in the state treasury. The fund
is not a reserve fund of the state. The fund shall consist of
money distributed to the state pursuant to the master
settlement agreement entered into between tobacco product
manufacturers and various states, including New Mexico, and
executed November 23, 1998 or any money released to the state
from a qualified escrow fund or otherwise paid to the state as
authorized by Section 6-4-13 NMSA 1978, enacted pursuant to the
master settlement agreement or as otherwise authorized by law.
Money in the fund shall be invested by the state investment
officer in accordance with the [
limitations in Article 12,
Section 7 of the constitution of New Mexico
]
prudent investor
rule as set forth in the Uniform Prudent Investor Act
. Income
from investment of the fund shall be credited to the fund.
Money in the fund shall not be expended for any purpose, except
as provided in this section.

B. In each fiscal year, an annual distribution
shall be made from the tobacco settlement permanent fund to the
tobacco settlement program fund of an amount equal to four and
seven-tenths percent of the average of the year-end market
values of the tobacco settlement permanent fund for the
immediately preceding five calendar years. In the event that
the actual amount distributed to the tobacco settlement program
fund in a fiscal year is insufficient to meet appropriations
from that fund for that fiscal year, the secretary of finance
and administration shall proportionately reduce each
appropriation accordingly.

C. Money in the tobacco settlement permanent 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 and the tax stabilization
reserve, will not meet the level of appropriations authorized
from the general fund for a fiscal year. In that event, in
order to avoid an unconstitutional deficit, the legislature may
authorize a transfer from the tobacco settlement permanent fund
to the general fund but only in an amount necessary to meet
general fund appropriations."

SECTION 2.
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
FUND--BEHAVIORAL HEALTH 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) the balance of the excess amount
above the annual average amount, if any, after the transfer is
made pursuant to Subparagraph (a) of this paragraph shall be
transferred as follows: 1) for fiscal years 2026 through 2028,
fifty percent to the early childhood education and care fund
and fifty percent to the behavioral health trust fund; provided
that if, as of the end of one of those fiscal years, the
balance of the early childhood education and care fund is less
than the balance of that fund as of the end of fiscal year
2025, the transfer to the behavioral health trust fund made
pursuant to this item shall be decreased by an amount equal to
one-half of the difference between the balance of the early
childhood education and care fund as of the end of fiscal year
2025 and the balance of that fund as of the end of that fiscal
year; and 2) for fiscal year 2029 and each fiscal year
thereafter, one hundred percent to the early childhood
education and care fund; 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 3.
Section 6-4-28 NMSA 1978 (being Laws 2023,
Chapter 166, Section 1) is amended to read:

"6-4-28. OPIOID SETTLEMENT RESTRICTED FUND CREATED--ADMINISTRATION--INCOME TO THE FUND.--

A. The "opioid settlement restricted fund" is
created as a nonreverting fund in the state treasury, separate
and distinct from the general fund. The opioid settlement
restricted fund consists of money, other than attorney fees and
costs, paid to the state pursuant to the New Mexico opioid
allocation agreement and pursuant to:

(1) the distributor settlement agreement; and

(2) opioid settlements.

B. The opioid settlement restricted fund also
consists of appropriations and donations. Money in the fund
shall be invested by the state investment officer in accordance
with [
law
]
the prudent investor rule as set forth in the
Uniform Prudent Investor Act
. Income from investment of the
fund shall be credited to the fund.

C. Opioid funds designated by the New Mexico opioid
allocation agreement to be distributed to local governments
shall not be deposited into the fund.

D. Appropriations from the opioid settlement
restricted fund shall only be made to the opioid crisis
recovery fund and shall not be made for any other purpose.

E. On July 1, 2024, a distribution shall be made
from the opioid settlement restricted fund to the opioid crisis
recovery fund in an amount equal to five percent of the year-end market value of the opioid settlement restricted fund for
the immediately preceding fiscal year.

F. On July 1, 2025, a distribution shall be made
from the opioid settlement restricted fund to the opioid crisis
recovery fund in an amount equal to five percent of the average
of the year-end market value of the opioid settlement
restricted fund for the immediately preceding two calendar
years.

G. On July 1, 2026, and on each July 1 thereafter,
a distribution shall be made from the opioid settlement
restricted fund to the opioid crisis recovery fund in an amount
equal to five percent of the average of the year-end market
values of the opioid settlement restricted fund for the
immediately preceding three calendar years.

H. For the purposes of this section:

(1) "distributor settlement agreement" means
the settlement agreement between the state and participating
political subdivisions and opioid distributors, including
McKesson corporation, Cardinal health and AmerisourceBergen
corporation, dated as of July 21, 2021 and any revision to the
agreement;

(2) "local government" means every litigating
county and municipality, each county regardless of population
and each municipality with a population exceeding ten thousand
according to the latest federal decennial census, any special
district identified in the distributor settlement agreement and
any local government identified in the New Mexico opioid
allocation agreement within the geographic boundaries of New
Mexico;

(3) "New Mexico opioid allocation agreement"
means the agreement entered into between the state and various
local governments on March 7, 2022 that relates to the
allocation of opioid funds in New Mexico;

(4) "opioid funds" means money obtained
through judgments or settlements as arising from the liability
of distributors of opioids, manufacturers of opioids,
pharmacies for the selling of opioids or the consultants,
agents or associates of distributors, manufacturers or
pharmacies; and

(5) "opioid settlements" means judgments or
settlements arising from the liability of distributors of
opioids, manufacturers of opioids, pharmacies for the selling
of opioids or the consultants, agents or associates of
distributors, manufacturers or pharmacies."

SECTION 4.
Section 6-4-32 NMSA 1978 (being Laws 2024,
Chapter 61, Section 1) is amended to read:

"6-4-32. HIGHER EDUCATION TRUST FUND.--

A. The "higher education trust fund" is created as
a nonreverting fund in the state treasury. The fund consists
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.

B. The state investment officer, subject to the
approval of the state investment council, shall invest money in
the 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 higher education
.

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
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, 2024, a distribution shall be made
from the trust fund to the higher education program fund in an
amount equal to forty-seven million nine hundred fifty thousand
dollars ($47,950,000).

E. On July 1, 2025 and each July 1 thereafter, a
distribution shall be made from the trust fund to the higher
education program fund in an amount equal to five percent of
the average of the year-end market values of the trust fund for
the immediately preceding three calendar years. If, on July 1
of a year, the trust fund has been in effect for less than
three calendar years, the distribution shall be in an amount
equal to five percent of the average of the year-end market
values of the trust fund for the immediately preceding number
of calendar years that the trust fund has been in effect.

F. In addition to the distribution pursuant to
Subsections D and E of this section, money in the higher
education trust 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 and the tax
stabilization reserve, will not meet the level of
appropriations authorized from the general fund for a fiscal
year. In that event, to avoid an unconstitutional deficit, the
legislature may appropriate from the trust fund to the general
fund only in the amount necessary to meet general fund
appropriations for that fiscal year and only if the legislature
has authorized transfers from the appropriation contingency
fund, the general fund operating reserve and the tax
stabilization reserve that exhaust those fund balances."

SECTION 5.
Section 6-5-10 NMSA 1978 (being Laws 1994,
Chapter 11, Section 1, as amended) is amended to read:

"6-5-10. STATE AGENCY REVERSIONS--DIRECTOR POWERS--COMPLIANCE WITH FEDERAL RULES--TRANSFER OF REVERSIONS IN
GENERAL FUND TO THE MEDICAID TRUST FUND.--

A. Except as provided in Subsection B of this
section, all unreserved undesignated fund balances in reverting
funds and accounts as reflected in the central financial
reporting and accounting system as of June 30 shall revert by
[
September 30
]
August 31
to the general fund. The division may
adjust the reversion within forty-five days of release of the
audit report for that fiscal year.

B. By October 1 of each year, the balance of the
reversions in excess of one hundred ten million dollars
($110,000,000) for the previous fiscal year shall be
transferred to the medicaid trust fund until the balance of the
medicaid trust fund reaches two billion dollars
($2,000,000,000) as of the end of a fiscal year.

C. The director of the division may modify a
reversion required pursuant to Subsection A of this section or
a transfer made pursuant to Subsection B of this section if the
reversion made pursuant to Subsection A of this section would
violate federal law or rules pertaining to supplanting of state
funds with federal funds or other applicable federal
provisions."

SECTION 6.
Section 6-8-1 NMSA 1978 (being Laws 1957,
Chapter 179, Section 1, as amended) is amended to read:

"6-8-1. DEFINITIONS.--As used in Chapter 6, Article 8
NMSA 1978:

A. "council" means the state investment council;

B. "department" means the department of finance and
administration;

C. "investment fund" means any fund managed or
invested by the state investment officer or the council as
required by law;

[
C.
]
D.
"land grant permanent funds" means the
permanent school fund established by Article 12, Section 2 of
the constitution of New Mexico and all other permanent funds
derived from lands granted or confirmed to the state by the act
of congress of June 20, 1910, entitled "An Act To enable the
people of New Mexico to form a constitution and state
government and be admitted into the Union on an equal footing
with the original States...";

[
D. "permanent funds" means the land grant
permanent funds, rural libraries endowment fund, severance tax
permanent fund, tobacco settlement permanent fund, conservation
legacy permanent fund and water trust fund;
]

E. "secretary" means the secretary of finance and
administration;

F. "severance tax permanent fund" means the fund
established by Article 8, Section 10 of the constitution of New
Mexico;

G. "tobacco settlement permanent fund" means the
fund established by Section 6-4-9 NMSA 1978; and

H. "water trust fund" means the fund established by
Article 16, Section 6 of the constitution of New Mexico."

SECTION 7.
Section 6-8-7 NMSA 1978 (being Laws 1957,
Chapter 179, Section 7, as amended) is amended to read:

"6-8-7. POWERS AND DUTIES OF THE STATE INVESTMENT COUNCIL
AND STATE INVESTMENT OFFICER--INVESTMENT POLICY--INVESTMENT
MANAGERS.--

A. Subject to the limitations, conditions and
restrictions contained in policymaking regulations or
resolutions adopted by the council, the council may make
purchases, sales, exchanges, investments and reinvestments of
the assets of all funds in accordance with the Uniform Prudent
Investor Act. The state investment officer and the council are
trustees of all funds under their control and shall see that
money invested is at all times handled in the best interests of
the state. The council may delegate administrative and
investment-related functions to the state investment officer.

B. The state investment officer shall formulate and
recommend to the council for approval investment regulations or
resolutions pertaining to the kind or nature of investments and
limitations, conditions and restrictions upon the methods,
practices or procedures for investment, reinvestment, purchase,
sale or exchange transactions that should govern the activities
of the investment office.

C. The council shall meet at least ten times per
year, and as often as exigencies may demand, to consult with
the state investment officer concerning the work of the
investment office. The council shall have access to all files
and records of the investment office and shall require the
state investment officer to report on and provide information
necessary to the performance of council functions. The council
may hire investment management or consulting firms to advise
the council with respect to the council's investment decisions
for the investment of funds managed by the investment office
and pay reasonable compensation for such management or
consulting services from the assets of the applicable funds,
subject to budgeting and appropriation by the legislature. The
terms of any such investment management or consulting services
contract shall incorporate the statutory requirements for
investment of funds under the council's jurisdiction. Prior to
being hired, a prospective investment management, advisory or
consulting services firm shall submit to the council a
disclosure detailing all campaign contributions made within the
last two years by the firm or the principals of the firm to any
member of the council, or to a political committee or other
entity that is intended to aid or promote the nomination or
election of any council member to a political office.

D. The council shall provide an opportunity for
public comment at meetings of the council. Advance notice of
meetings shall be published on the council's [
web site
]
website

and in a newspaper of general circulation at least ten days in
advance of the meeting.

E. All funds
invested or
managed by the state
investment officer
or the council
shall be
invested or
managed
in accordance with the Uniform Prudent Investor Act. The
council may form and use committees to study and make
recommendations to the council. Prior to commencing work for
the council, a committee member who is not a member of the
council shall submit to the council a disclosure detailing all
campaign contributions made within the last two years to any
member of the council or to a political committee or other
entity that is intended to aid or promote the nomination or
election of any council member to a political office.

F. Fiduciaries of the [
permanent
]
investment
funds
are:

(1) the council;

(2) the state investment officer and
investment office staff;

(3) any person providing investment advice to
the council, the state investment officer or investment office
staff for an investment management, advisory or consulting
services fee; and

(4) all persons exercising discretionary
authority over or control of funds under the management of the
council.

G. The council may contract for legal services for
litigation on a contingent or partly contingent fee basis,
subject to an expedited solicitation process devised and
approved by the council; provided that:

(1) amounts recovered by the legal services
contractor shall be deposited in the state investment council
suspense fund;

(2) the council shall submit each proposed
contract to the attorney general and the department for review
of the contingency fee. The attorney general's and the
department's review shall take into account the complexity of
the factual and legal issues presented by the claims to be
pursued under the contract. If the attorney general or the
department advises the council that the proposed contingency
fee is not reasonable, the council may nevertheless approve the
contract and the contingency fee by a majority vote of its
members; and

(3) each prospective legal services contractor
seeking to represent the council on a contingent or partly
contingent fee basis shall file with the council the disclosure
required by Section 13-1-191.1 NMSA 1978 disclosing all
campaign contributions made to the governor, attorney general,
state treasurer or any member of the council, or to a political
committee that is intended to aid or promote the nomination or
election of any candidate to a state office if the committee
is:

(a) established by any of the foregoing
persons or their agents;

(b) established in consultation with or
at the request of any of the foregoing persons or their agents;
or

(c) controlled by one of the foregoing
persons or their agents.

H. The council may select and contract for the
services of one or more custodian banks for all funds under the
council's management. For the purpose of this subsection,
"custodian bank" means a financial institution with the general
fiduciary duties to manage, control and collect the assets of
an investment fund, including receiving all deposits and paying
all disbursements as directed by staff, safekeeping of assets,
coordination of asset transfers, timely settlement of
securities transactions and accurate and timely reporting of
the assets by individual account and in total.

I. For funds available for investment for more than
one year, the council may contract with any state agency to
provide investment advisory or investment management services,
separately or through a pooled investment fund; provided that
the state agency enters into a joint powers agreement with the
council and that the state agency pays at least the direct cost
of such services. Notwithstanding any statutory provision
governing state agency investments, the council may invest
funds available from a state agency pursuant to a joint powers
agreement in any type of investment permitted for the land
grant permanent funds under the prudent investor rule. In
performing investment services for a state agency, the council
and the state investment officer and investment office staff
are exempt from the New Mexico Uniform Securities Act. As used
in this subsection, "state agency" means any branch, agency,
department, board, instrumentality, institution or political
subdivision of the state, the New Mexico finance authority, the
New Mexico mortgage finance authority and any tax-exempt
private endowment entity whose sole beneficiary is a state
agency or whose beneficiaries are students attending a public
educational institution in the state.

J. The state investment officer shall provide
quarterly performance reports to the legislative finance
committee. Annually, the state investment officer shall ratify
and provide written investment policies, including any
amendments, to the legislative finance committee.

K. Council members, the state investment officer
and investment office staff and committee members appointed by
the council, jointly and severally, shall be indemnified by the
state, out of the [
permanent
]
investment
funds, from all
claims, demands, suits, actions, damages, judgments, costs,
charges and expenses, including court costs and attorney fees,
against all claims, liability, losses or damages arising from
any decisions made or actions taken while acting within the
scope of duty and pursuant to law as a council member, the
state investment officer, investment office staff or a
committee member appointed by the council. Following
indemnification, if it is shown that the indemnified person
acted fraudulently or with intentional malice, the state shall
have the right to recover from the indemnified person any
amount expended under this subsection."

SECTION 8.
Section 6-8-14 NMSA 1978 (being Laws 1957,
Chapter 179, Section 14, as amended) is amended to read:

"6-8-14. MONTHLY REPORTS.--No later than twenty days
after the end of each month, the state investment officer shall
submit to the council a report of the operations of the
investment office during the past month. Each report shall
include a schedule of cumulative fiscal year actual and
budgeted expenditures and a monthly summary of contributions,
distributions, fees, income and net gains or losses for each
[
permanent
]
investment
fund and investment pool. The reports
shall be published on the [
web site
]
website
of the council and
the sunshine portal and shall be open for inspection to the
public and the press in the investment office."

SECTION 9.
Section 6-8-23 NMSA 1978 (being Laws 2011,
Chapter 9, Section 2) is amended to read:

"6-8-23. COMPENSATION UNDER CONTINGENT FEE CONTRACTS--SUSPENSE FUND CREATED.--

A. For the purpose of making disbursements and
distributions pursuant to this section, the "state investment
council suspense fund" is created in the state treasury.

B. When pursuing a claim and utilizing legal
services on a contingent fee basis, all amounts received by the
legal services contractor as satisfaction of the claim shall be
transferred to the council and deposited into the state
investment council suspense fund to the credit of the council.
Upon the direction of the state investment officer, the
contingent attorney fees due to the legal services contractor
shall be disbursed from the suspense fund to the contractor.

C. After a disbursement to a contractor pursuant to
Subsection B of this section, the balance of the deposit into
the state investment council suspense fund shall be distributed
to the appropriate [
permanent
]
investment
fund or other
appropriate fund from which the loss occurred that originated
the claim pursued by the legal services contractor."

SECTION 10.
Section 6-12-2 NMSA 1978 (being Laws 1913,
Chapter 83, Section 1, as amended) is amended to read:

"6-12-2. CERTIFICATES OF INDEBTEDNESS AND INTEREST--TREASURER MAY BORROW TO PAY.--Whenever the money in the funds
is insufficient to meet the outstanding certificates of
indebtedness and interest coupons as they mature, it [
shall be
]

is
the duty of the state treasurer to borrow temporarily a
sufficient sum to make [
such
]
the
payment, and for [
such
]
those

purposes, the [
said
] treasurer is [
hereby
] authorized and
empowered to make and negotiate the necessary loan on the best
terms obtainable at a rate of interest not to exceed six [
per
centum per annum
]
percent per year
; provided that any surplus
money in the interest on deposits fund [
and any surplus of any
other fund on hand not otherwise appropriated
] shall be first
used to pay [
said
]
the
deficit before borrowing money to make
[
such
]
the
payments. The secretary of finance and
administration shall countersign any and all necessary papers
for the negotiation of [
such
]
the
loan and charge the proceeds
to the treasurer, and the treasurer shall redeem [
such
]
the

paper out of the interest fund whenever there [
shall be
]
is

money in [
such
]
the
fund available."

SECTION 11.
Section 6-29-7 NMSA 1978 (being Laws 2005,
Chapter 146, Section 7) is amended to read:

"6-29-7. TRIBAL INFRASTRUCTURE PROJECT FUND--CREATED--PURPOSE--APPROPRIATIONS.--

A. The "tribal infrastructure project fund" is
created in the state treasury and:

(1) the department of finance and
administration shall administer the project fund;

(2) the project fund shall consist of:

(a) distributions made to it from the
trust fund;

(b) payments of principal and interest
on loans for qualified projects;

(c) other money appropriated by the
legislature or distributed or otherwise allocated to the
project fund for the purpose of supporting qualified projects;
and

(d) income from investment of the money
in the project fund that shall be credited to the project fund;

(3) balances in the project fund at the end of
a fiscal year shall not revert to the trust fund or to the
general fund; and

(4) the project fund may consist of
subaccounts as determined to be necessary by the department of
finance and administration.

B. The department of finance and administration may
establish procedures and adopt rules as required to administer
the project fund and to originate grants or loans for qualified
projects approved by the board.

C. [
Beginning in fiscal year 2006 and in subsequent
years
]
In each fiscal year
, the lesser of one percent of the
project fund or one hundred thousand dollars ($100,000) is
appropriated from the project fund to the department of finance
and administration for expenditure in the fiscal year in which
it is appropriated, to administer the project fund. Any
unexpended or unencumbered balance remaining at the end of any
fiscal year shall revert to the project fund.

D. [
Beginning in fiscal year 2006 and in each
subsequent
]
In each fiscal
year, the lesser of five percent of
the project fund or five hundred thousand dollars ($500,000) is
appropriated from the project fund to the Indian affairs
department for expenditure in the fiscal year in which it is
appropriated to administer the Tribal Infrastructure Act, to
pay per diem and mileage as required by that act and for
operation of the board. Any unexpended or unencumbered balance
remaining at the end of any fiscal year shall revert to the
project fund.

E. The balance in the project fund not otherwise
appropriated in this section is [
appropriated to the department
of finance and administration for expenditure in fiscal year
2006 and in subsequent fiscal years
]
subject to appropriation
by the legislature
to carry out the provisions of the Tribal
Infrastructure Act by providing grants or loans for qualified
projects. Any unexpended or unencumbered balance remaining at
the end of a fiscal year shall revert to the project fund."

SECTION 12.
Section 6-30-7 NMSA 1978 (being Laws 2010,
Chapter 10, Section 7) is amended to read:

"6-30-7. COLONIAS INFRASTRUCTURE TRUST FUND--CREATED--
INVESTMENT--DISTRIBUTION.--

A. The "colonias infrastructure trust fund" is
created
as a nonreverting fund
in the state treasury. The
trust fund shall consist of money that is appropriated, donated
or otherwise allocated to it. Money in the trust fund shall be
invested by the state investment officer in [
the manner that
land grant permanent funds are invested pursuant to Chapter 6,
Article 8 NMSA 1978
]
accordance with the prudent investor rule
set forth in the Uniform Prudent Investor Act
. Income from
investment of the trust fund shall be credited to the fund.
Money in the trust fund shall not be expended for any purpose,
but an annual distribution from the trust fund shall be made to
the project fund pursuant to this section.

B. On July 1 of each year in which adequate money
is available in the trust fund, an annual distribution shall be
made from the trust fund to the project fund in the amount of
ten million dollars ($10,000,000) until the distribution is
less than an amount equal to four and seven-tenths percent of
the average of the year-end market values of the trust fund for
the immediately preceding five calendar years. Thereafter, the
amount of the annual distribution shall be four and seven-
tenths percent of the average of the year-end market values of
the trust fund for the immediately preceding five calendar
years."

SECTION 13.
Section 7-27-50 NMSA 1978 (being Laws 2024,
Chapter 56, Section 3) is amended to read:

"7-27-50. CAPITAL DEVELOPMENT AND RESERVE FUND.--

A. The "capital development and reserve fund" is
created as a nonreverting fund in the state treasury. The fund
consists 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 Subsections E through F of this section. Money
in the fund shall not be pledged against any state debt.

B. The state investment officer, subject to the
approval of the
state investment
council, shall invest money in
the 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
]

director of the board of finance division of the department of
finance and administration
.

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
October 1 each year to the legislative finance committee, the
revenue stabilization and tax policy committee and any other
appropriate interim committees.

D. On January 1 of each year, a distribution shall
be made from the capital development and reserve fund to the
capital development program fund in an amount equal to five
percent of the average of the fiscal year-end market values of
the capital development and reserve fund for the immediately
preceding three fiscal years. If, on January 1 of a year, the
capital development and reserve fund has been in effect for
less than three fiscal years, the distribution shall be in an
amount equal to five percent of the average of the fiscal year-end market values of the capital development and reserve fund
for the immediately preceding number of fiscal years that the
fund has been in effect.

E. Money in the fund is subject to appropriation by
the legislature for capital projects or for transfer to the
severance tax permanent fund.

F. Money in the capital development and reserve
fund may be expended in the event that the balance of the
severance tax bonding fund is insufficient to meet principal
and interest payments on outstanding bonds. In that event, the
balance in the reserve fund shall be transferred to the
severance tax bonding fund only in the amount necessary to meet
the principal and interest payments."

SECTION 14.
Section 7-27-51 NMSA 1978 (being Laws 2024,
Chapter 56, Section 4) is amended to read:

"7-27-51. CAPITAL DEVELOPMENT PROGRAM FUND.--

A.
The "capital development program fund" is
created as a nonreverting fund [
as a subaccount of the
severance tax bonding fund
]
in the state treasury
. The fund
consists of distributions, appropriations, gifts, grants,
donations and income from investment of the fund. The
department of finance and administration shall administer the
fund. Money in the fund is subject to appropriation by the
legislature to fund [
capital projects
]
a capital project or a
functional phase of a capital project
with a total cost of less
than [
five million dollars ($5,000,000)
]
twenty-five million
dollars ($25,000,000)
and only the planning and design of
capital projects with a total cost greater than [
that amount
]

two million dollars ($2,000,000)
. Expenditures from the fund
shall be by warrant of the secretary of finance and
administration pursuant to vouchers signed by the secretary of
finance and administration or the secretary's authorized
representative. [
Any unexpended or unencumbered balance of an
appropriation for a capital project remaining after two years
following the date of the appropriation
]
Any law making an
appropriation from the fund for a capital project shall provide
that any unexpended or unencumbered balance of the
appropriation at the end of the project
shall revert to the
severance tax permanent fund.

B. As used in this section, "functional phase"
means a phase of a capital project that, upon completion, can
be put in service before all phases of the capital project are
completed.
"

SECTION 15.
Section 9-16-15 NMSA 1978 (being Laws 2009,
Chapter 122, Section 59) is amended to read:

"9-16-15. MORTGAGE REGULATORY FUND--CREATED--PURPOSE--
APPROPRIATION.--

A. The "mortgage regulatory fund" is created as a
nonreverting fund in the state treasury and shall be
administered by the financial institutions division of the
regulation and licensing department. The fund shall consist of
application, licensing, renewal, examination, investigation and
any other fees received that are associated with the costs of
administering the New Mexico Mortgage Loan Originator Licensing
Act, fees specified in Subsection E of Section 58-21-5 NMSA
1978 and any money that is appropriated or donated or that
otherwise accrues to the fund. [
Money in the fund shall be
invested by the state investment officer in the manner that
land grant permanent funds are invested pursuant to Chapter 6,
Article 8 NMSA 1978. Income from investment of the fund shall
be credited to the fund.
]

B. Money in the mortgage regulatory fund is
appropriated to the financial institutions division of the
regulation and licensing department to carry out the provisions
of the New Mexico Mortgage Loan Originator Licensing Act and
the Mortgage Loan Company Act.

C. Money shall be disbursed from the mortgage
regulatory fund only on warrant of the secretary of finance and
administration upon vouchers signed by the director of the
financial institutions division or the director's authorized
representative. [
Any unexpended or unencumbered balance
remaining at the end of a fiscal year shall not revert to the
general fund.
]"

SECTION 16.
Section 9-26-17 NMSA 1978 (being Laws 2024,
Chapter 5, Section 1) is amended to read:

"9-26-17. WORKFORCE DEVELOPMENT AND APPRENTICESHIP TRUST
FUND.--

A. The "workforce development and apprenticeship
trust fund" is created
as a nonreverting fund
within the state
treasury. The fund consists 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.

B. The state investment officer, subject to the
approval of the state investment council, shall invest money in
the workforce development and apprenticeship trust 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 workforce solutions
.

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
November 1 each year to the legislative finance committee, the
revenue stabilization and tax policy committee and any other
appropriate interim committees.

D. Subject to the availability of funds:

(1) on July 1, 2024 and July 1, 2025:

(a) two million five hundred thousand
dollars ($2,500,000) shall be transferred to the public works
apprentice and training fund; and

(b) two million five hundred thousand
dollars ($2,500,000) shall be appropriated to the workforce
solutions department to carry out the purposes of the
Apprenticeship Assistance Act; and

(2) on July 1 of each year thereafter:

(a) one million five hundred thousand
dollars ($1,500,000) shall be transferred to the public works
apprentice and training fund; and

(b) one million five hundred thousand
dollars ($1,500,000) shall be appropriated to the workforce
solutions department to carry out the purposes of the
Apprenticeship Assistance Act.

E. In addition to the transfers and appropriations
pursuant to Subsection D of this section, money in the
workforce development and apprenticeship trust 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 fiscal
year. In that event, to avoid an unconstitutional deficit, the
legislature may appropriate from the workforce development and
apprenticeship trust fund to the general fund only in the
amount necessary to meet general fund appropriations for that
fiscal year and only if the legislature 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 17.
Section 9-29A-1 NMSA 1978 (being Laws 2020,
Chapter 3, Section 1, as amended) is amended to read:

"9-29A-1. EARLY CHILDHOOD EDUCATION AND CARE FUND.--

A. The "early childhood education and care fund" is
created
as a nonreverting fund
within the state treasury. The
fund 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.

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
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 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
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 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 18.
Section 18-18-1 NMSA 1978 (being Laws 2019,
Chapter 165, Section 1) is amended to read:

"18-18-1. RURAL LIBRARIES ENDOWMENT FUND--
DISTRIBUTIONS.--

A. The "rural libraries endowment fund" is created

as a nonreverting fund
in the state treasury to support the
preservation, development and establishment of rural libraries
throughout the state by providing funding for rural libraries'
operational and capital needs and funding for the delivery of
specialized services to rural libraries.

B. The rural libraries endowment fund consists of

appropriations and donations to the fund and all income from
investment of the fund. The state investment officer shall

invest money in the fund [
as money in the fund described in

Article 12, Section 7 of the constitution of New Mexico is
invested
]
in accordance with the prudent investor rule as set
forth in the Uniform Prudent Investor Act
.

C. [
Distributions of money
]
A distribution
from the
rural libraries endowment fund shall be

[
(1) in the following gross amounts:

(a) for fiscal year 2022 and each of the
following five fiscal years, the difference, if positive,
between all fund investment income yielded through the
immediately preceding calendar year and all fund distributions,
up to five percent of the year-end market value of the fund for
the immediately preceding calendar year; and

(b) for fiscal year 2028 and each
subsequent fiscal year, the average of fund investment income
yielded in the immediately preceding five calendar years, up to
five percent of the year-end market value of the fund for the
immediately preceding calendar year; and

(2)
]
made to the following funds in an amount
equal to five percent of the average year-end market value of
the fund for the immediately preceding five calendar years
in
the following proportions:

[
(a)
]
(1)
ninety-five percent [
of the gross
distribution
] to the rural libraries program fund for grants
through the rural libraries grant program; and

[
(b)
]
(2)
five percent [
of the gross
distribution
] to the cultural affairs department for the
state's delivery of specialized services to rural libraries."

SECTION 19.
Section 19-1-19 NMSA 1978 (being Laws 1966,
Chapter 4, Section 1, as amended) is amended to read:

"19-1-19. PUBLIC BUILDINGS AT CAPITAL PERMANENT FUND--INVESTMENT.--

A.
The state investment officer shall, in the same
manner [
provided under Section 11-2-8.9 NMSA 1953 for other
permanent
]
as the land grant permanent
funds, assume the
investment responsibility for the public buildings at capital
permanent fund created by Section [
7-1-16 NMSA 1953
]
19-1-17
NMSA 1978.

B. As used in this section, "land grant permanent
funds" means the permanent school fund established by Article
12, Section 2 of the constitution of New Mexico and all other
permanent funds derived from lands granted or confirmed to the
state by the act of congress of June 20, 1910, entitled "An Act
To enable the people of New Mexico to form a constitution and
state government and be admitted into the Union on an equal
footing with the original States..."
."

SECTION 20.
Section 24-5A-4 NMSA 1978 (being Laws 2015,
Chapter 5, Section 4) is amended to read:

"24-5A-4. VACCINE PURCHASING FUND.--

A. The "vaccine purchasing fund" is created
as a
nonreverting fund
in the state treasury. The fund consists of
amounts reimbursed to the state by health insurers and group
health plans pursuant to the Vaccine Purchasing Act and of
appropriations from, and transfers made to, the fund.
Income
from investment of the fund shall be credited to the fund.

Money in the fund shall be expended only for the purposes
specified in the Vaccine Purchasing Act, by warrant issued by
the secretary of finance and administration pursuant to
vouchers approved by the secretary of health.

B. Money from the fund may be appropriated to the
department to be expended only as authorized in Section [
5 of
the Vaccine Purchasing Act
]
24-5A-5 NMSA 1978
.

C. The fund shall be audited in the same manner as
other state funds are audited, and all records of payments made
from the fund shall be open to the public.

[
D. Any balance remaining in the fund shall not
revert or be transferred to any other fund at the end of a
fiscal year.

E. Money in the fund shall be invested by the state
investment officer in accordance with the limitations in
Article 12, Section 7 of the constitution of New Mexico.

Income from investment of the fund shall be credited to the
fund.
]"

SECTION 21.
Section 58-32-1004 NMSA 1978 (being Laws
2016, Chapter 88, Section 1004) is amended to read:

"58-32-1004. MONEY SERVICES REGULATORY FUND--CREATED--
PURPOSE--APPROPRIATION.--

A. The "money services regulatory fund" is created
as a nonreverting fund in the state treasury and shall be
administered by the financial institutions division of the
regulation and licensing department. The fund shall consist of
application, licensing, renewal, investigation and any other
fees received that are associated with the costs of
administering the Uniform Money Services Act and any money that
is appropriated or donated or that otherwise accrues to the
fund. [
Money in the fund shall be invested by the state
investment officer in the manner that land grant permanent
funds are invested pursuant to Chapter 6, Article 8 NMSA 1978.
Income from investment of the fund shall be credited to the
fund.
]

B. Money in the money services regulatory fund is
subject to appropriation by the legislature to the financial
institutions division of the regulation and licensing
department to carry out the provisions of the Uniform Money
Services Act.

C. Money shall be disbursed from the money services
regulatory fund only on warrant of the secretary of finance and
administration upon vouchers signed by the director of the
financial institutions division or the director's authorized
representative. Any unexpended or unencumbered balance
remaining at the end of a fiscal year shall not revert to the
general fund."

SECTION 22.
Section 72-4A-8 NMSA 1978 (being Laws 2001,
Chapter 164, Section 8) is amended to read:

"72-4A-8. WATER TRUST FUND--CREATED--INVESTMENT--DISTRIBUTION.--

A. The "water trust fund" is created in the state
treasury. The fund shall consist of money appropriated,
donated or otherwise accrued to the fund. Money in the fund
shall be invested by the state investment officer [
as land
grant permanent funds are invested pursuant to Chapter 6,
Article 8 NMSA 1978
]
in accordance with the prudent investor
rule as set forth in the Uniform Prudent Investor Act
.
Earnings from investment of the fund shall be credited to the
fund. Money in the fund shall not be expended for any purpose,
but an annual distribution shall be made to the water project
fund in accordance with Subsection B of this section.

B. On July 1 of [
fiscal year 2003 and on July 1 of
each fiscal year thereafter, an annual
]
each year, a

distribution shall be made from the water trust fund to the
water project fund in the amount of four million dollars
($4,000,000) until that amount is less than an amount equal to
four and seven-tenths percent of the average of the year-end
market values of the water trust fund for the immediately
preceding five calendar years. Thereafter, the amount of the
annual distribution shall be four and seven-tenths percent of
the average of the year-end market values of the water trust
fund for the immediately preceding five calendar years."

SECTION 23.
Section 73-17-14 NMSA 1978 (being Laws 1927,
Chapter 45, Section 805, as amended) is amended to read:

"73-17-14. STATE LANDS.--

A. Whenever there [
shall be
]
are
included in any
district public lands belonging to the state [
of New Mexico
]
subject to entry or [
which
]
that
have been entered and for
which no certificates of purchase have been issued, [
such
]
the

lands are [
hereby made and
] declared to be subject to all of
the provisions of [
this
]
The Conservancy
Act
of New Mexico
to
the same extent and in the same manner in which the lands of a
like character held under private ownership are or may be
subject.

B. All notices required to be given under [
this
]

The Conservancy
Act
of New Mexico
shall, as soon as [
such
]
the

notices are issued, be served upon the commissioner of public
lands of the state [
of New Mexico
] by mailing to [
his
]
the
commissioner's
office a copy [
thereof
]
of them
, enclosed in a
sealed envelope, with postage prepaid.

C. On all books and records of the district, the
words "state lands" shall be used in the places [
therein
]
provided
in them
for the name of the owner of lands, but in all
other respects the [
said
] books and records shall be kept as
though the described lands were privately owned.

D. Upon the confirmation of any assessment against
lands of the state, that portion of the records relating to
state lands, properly signed by the president and with the seal
of the district [
thereunto
] affixed and attested by the
signature of the secretary, shall be delivered by the secretary
to the commissioner of public lands. It [
shall be
]
is
the duty
of the commissioner of public lands to receive [
the same
]
it
as
a record of the assessment of the [
said
] district against the
[
said
] lands, and the [
said
] record [
shall be
]
is
the authority
of the commissioner of public lands to demand and receive the
assessments due the district as found in the [
same
]
record
.

E. The commissioner of public lands shall enter on
the books of [
his
]
the commissioner's
office, against each
description of [
such
]
those
state lands, the amounts of
assessments [
thereon
]
on them
and shall certify [
the same
]
them

to the secretary of finance and administration, who shall draw
a warrant on the state treasurer [
therefor
]
for them
to be paid
out of any funds in [
his
]
the treasurer's
hands [
not otherwise
]
appropriated [
such
]
for that purpose. The
warrant shall be
forwarded by the secretary of finance and administration to the
treasurer, and shall by [
him
]
the treasurer
be applied in
payment of [
such
]
the
assessments and [
by him
] be credited to
the proper funds of the district. No patent shall issue for
[
such
]
the
lands until the amount of all [
such
]
the
assessments
with interest at seven percent has been paid. No public lands
[
which were
] unentered at the time any assessment was levied
against [
the same
]
them
by any district shall be sold for
[
such
]
the
assessment."

SECTION 24.
Section 73-18-11 NMSA 1978 (being Laws 1939,
Chapter 148, Section 11) is amended to read:

"73-18-11. STATE LANDS--PUBLIC LANDS.--

[
(1)
]
A.
The board of a contracting district shall
cause notice to be given to the commissioner of public lands
annually of the amount of assessment to become due on account
of lands of the state within the district, and the commissioner
of public lands shall cause the [
same
]
assessment
to be paid
out of any funds in [
his
]
the commissioner's
hands [
not
otherwise
] appropriated
for that purpose
.

[
(2)
]
B.
Public lands of the United States within
any contracting district shall be subject to assessment for all
purposes of [
this
]
The Conservancy District-Reclamation
Contract
Act to the extent provided by the act of congress
approved August 11, 1916, 39 Statutes at Large 506, upon full
compliance [
therewith
]
with it
by the district."

SECTION 25.
Section 75-12-1 NMSA 1978 (being Laws 2023,
Chapter 26, Section 2) is amended to read:

"75-12-1. CONSERVATION LEGACY PERMANENT FUND--CREATED--INVESTMENT--DISTRIBUTION.--

A. The "conservation legacy permanent fund" is
created as a nonreverting fund in the state treasury. The fund
consists of distributions, appropriations, gifts, grants,
donations and income from investment of the fund. Money in the
fund shall be invested by the state investment officer [
with
the same risk and return profile as land grant permanent funds
are invested pursuant to Chapter 6, Article 8 NMSA 1978
]
in
accordance with the prudent investor rule as set forth in the
Uniform Prudent Investor Act
. Earnings from investment of the
fund shall be credited to the fund. Money in the fund shall be
expended only as provided by this section.

B. If, on July 1 of each year, the conservation
legacy permanent fund exceeds one hundred fifty million dollars
($150,000,000) and the investment income to the fund for the
previous fiscal year exceeded five million dollars
($5,000,000), any investment income to the fund from the
previous fiscal year in excess of five million dollars
($5,000,000) shall be distributed to the land of enchantment
legacy fund."

SECTION 26.
REPEAL.--Section 6-8-6 NMSA 1978 (being Laws
1957, Chapter 179, Section 6, as amended) is repealed.

SECTION 27.
EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2026.

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