Summary:

 Senate Bill 134 (SB 134) provides zero-interest loans to political subdivisions of the state that have been approved for federal public assistance funding from the Federal Emergency Management Agency (FEMA) for a federally declared natural disaster; requires reimbursement contracts; provides for enforcement of the terms of the loan contracts; creates the natural disaster revolving fund; provides an annual transfer from the Appropriation Contingency Fund to the Natural Disaster Revolving Fund (NDRF); provides that the state reserves consist of certain funds, including the NDRF; makes an appropriation; and declares an emergency. 

Legislation Overview:

 Senate Bill 134 (SB 134) establishes the Natural Disaster Loan Program (NDLP) within the Department of Finance and Administration (DFA). In consultation with the Homeland Security and Emergency Management Department (HSEMD), the DFA is to provide zero-interest reimbursable loans to political subdivisions of the state that have been approved for federal public assistance funding from the FEMA for a federally declared natural disaster. The DFA must require a contract for reimbursement, specifying:

(1) that the political subdivision must pay the loan by providing a release to the HSMED to transfer directly to the DFA money received from the approved federal public assistance funding that serves as the basis for the loan; 

(2) that the political subdivision must repay the loan within thirty days of becoming eligible for reimbursement under the approved federal public assistance funding; 

(3) such notice or reporting requirements that the DFA deems necessary to be sufficiently informed regarding compliance with the program; 

(4) a reasonably prompt deadline for expending the loan, as well as interest to be paid if the deadline is not met;

(5) that upon failure to meet a requirements of the plan, the loan must be repaid at a fair current market interest rate or federal interest rate; and 

(6) that the political subdivision remit to the DFA all income from investment of money from the loan. 

All loan repayments and interest penalty payments made must be deposited into the NDRF. 

The Secretary of Finance and Administration is to take any and all legal actions necessary to enforce the terms of contracts.

On or before June 1, 2025 and every six months thereafter, the DFA must provide a report to the Legislative Finance Committee (LFC) and the Governor regarding the loans made, including:

(1) projects for which loan contracts have been made;

(2) the dollar amounts of and repayments made; and

(3) any breaches of those contracts, subsequent enforcement actions and results of the enforcement actions, including applicable interest rates for contract breaches and the determination of those interest rates. 

The "Natural Disaster Revolving Fund" (NDRF) is created in the State Treasury. The purpose of the fund is to provide loans to political subdivisions of the state that have been approved for federal public assistance funding from the FEMA for a federally declared natural disaster. The fund consists of distributions, transfers, appropriations, gifts, grants, donations and income from investment of the fund. Money in the fund is to be invested by the state treasurer. 

Money in the NDRF is appropriated to the DFA for: 

(1) the purposes of the NDLP; and 

(2) administration of the NDLP and enforcement of loan contracts, provided that no more than two hundred fifty thousand dollars ($250,000) annually shall be used for these purposes. 
The DFA shall administer the fund, and expenditures from the fund shall be authorized by the Secretary of Finance and Administration.

Any unexpended or unencumbered balance exceeding one hundred million dollars ($100,000,000) and remaining at the end of a fiscal year shall revert to the Appropriation Contingency Fund. Any unexpended or unencumbered balance remaining at the end of a fiscal year must be included in the calculation of state reserves. 

Any money repaid or reimbursed to the state related to this Act must be deposited in the NDRF. 

Within thirty days after August 1 of each year through 2028, the Secretary of Finance and Administration is to calculate the unexpended and unencumbered balance of the NDRF and, subject to availability of funds, transfer from the Appropriation Contingency Fund to the NDRF an amount equal to one hundred million dollars ($100,000,000) less the balance of the NDRF. If the unexpended and unencumbered balance of the NDRF is equal to or greater than one hundred million dollars ($100,000,000), no transfer is to be made. 
Section 6-4-2.3 NMSA 1978 is amended to allow for creation within the General Fund the "Appropriation Contingency Fund", which may only be expended upon specific legislative authorization, or as otherwise provided. 

A new section of Chapter 6, Article 4 NMSA 1978 is enacted to state that the reserves are to consist of the: 

A. appropriation contingency fund; 
B. general fund operating reserve; 
C. government results and opportunity expendable trust; 
D. state-support reserve fund; 
E. tax stabilization reserve; and 
F. natural disaster revolving fund. 

One hundred million dollars is appropriated from the General Fund to the NDRF for expenditure in Fiscal Year 2025 and subsequent years for the purposes of the fund. Any unexpended or unencumbered balance remaining at the end of a fiscal year is not to revert to the General Fund. 

An emergency is declared.
 

Current Law:

 The loans, terms, processes and authorities referenced are not currently available. Further, the appropriation is not in place, and an emergency related to this issue has not been declared.