Summary:

 Senate Bill 31 (SB 31) provides zero-interest loans to political subdivisions of the state and electric cooperatives 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 (NDRF); provides an annual transfer from the appropriation contingency fund to the NDRF; provides that the state reserves must consist of certain funds; creates the Federal Reimbursement Revolving Fund; makes appropriations; and declares an emergency.  

Legislation Overview:

 Senate Bill 31 (SB 31) enacts and amends Section 6-4-2.3 NMSA 1978 as follows:

•	The Department of Finance and Administration (DFA), in consultation with the Homeland Security and Emergency Management Department (HSEMD), shall provide zero-interest reimbursable loans to political subdivisions of the state and electric cooperatives that have been approved for funding from the Federal Emergency Management Agency (FEMA) for a federally declared natural disaster. 
•	The DFA is to require a contract for reimbursement from a subdivision cooperative to receive this loan. All loan repayments and interest penalty payments are to be deposited into the Natural Disaster Revolving Fund (NDRF). 
•	On or before June 1, 2025 and every six months thereafter, the DFA and administration must provide a report to the Legislative Finance Committee and the governor regarding the loans made.
•	The NDRF is created in the State Treasury. The fund consists of distributions, transfers, appropriations, gifts, grants, donations and income from investment of the fund. 
•	Money in the natural disaster revolving fund is appropriated to the DFA and administration for: (1) the purposes of the Natural Disaster Loan Program (NDLP).  No more than two hundred fifty thousand dollars ($250,000) annually is to be used for these purposes. 
•	Money in the NDRF is appropriated to the HSEMD for the compliance management of programs administered by the FEMA that serve as the basis for a natural disaster loan, provided that no more than one hundred fifty thousand dollars ($150,000) annually will be used for these purposes. 
•	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 fifty million dollars ($150,000,000) less the balance of the NDRF. If the unexpended and unencumbered balance of the NDRF is equal to or greater than one hundred fifty million dollars ($150,000,000), no transfer is to be made.

•	Section 6-4-2.3 NMSA 1978 is amended, deleting the following language:

o	“For the seventy-ninth fiscal year, if the revenues of the General Fund exceed the total appropriations, the excess revenue is to be transferred to the Appropriation Contingency Fund. Five million dollars ($5,000,000) is transferred from the Operating Reserve Fund to the Public School State Support Reserve Fund in the eightieth fiscal year. If revenues and transfers to the General Fund… are not sufficient to meet appropriations, the governor, with State Board of Finance approval, may transfer at the end of that year the amount necessary to meet the year's obligations from the unencumbered balance remaining in the General Fund Operating Reserve in a total not to exceed sixty million dollars ($60,000,000).”

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

o	Appropriation Contingency Fund; 
o	General Fund Operating Reserve; 
o	Government Results and Opportunity Expendable Trust; 
o	State-Support Reserve Fund; 
o	Tax Stabilization Reserve; 
o	Natural Disaster Revolving Fund; and 
o	Federal Reimbursement Revolving Fund.

•	 The "Federal Reimbursement Revolving Fund" (FRRF) is created as a non-reverting fund in the State Treasury. The purpose of the fund is to use reimbursements from the federal government for claims created by the state's response to declared emergencies to ensure recovery for local communities affected by such emergencies and respond to future emergencies in New Mexico. The fund consists of reimbursed claims from the federal government, gifts, grants, transfers, distributions, donations and income from investment of the fund. 

•	Money in the fund is appropriated to the DFA to make appropriations for disaster relief after the governor declares an emergency. 

•	The DFA is to administer the fund. 

•	Any money reimbursed to the state or otherwise received by the state for emergency expenditures from the federal government, including money the state receives through the federal Hermit's Peak/Calf Canyon Fire Assistance Act, unless otherwise obligated under an agreement with the federal government, is to be deposited in FRRF. 

•	One hundred fifty million dollars ($150,000,000) is appropriated from the general fund to the natural disaster revolving fund for expenditure in fiscal year 2025 and subsequent fiscal years for the purposes of the fund. 

•	An emergency is declared.
 

Current Law:

 The proposed resources and guidance are not currently available. Section 6-4-2.3 NMSA 1978 currently includes the language proposed to be deleted: “For the seventy-ninth fiscal year, if the revenues of the General Fund exceed the total appropriations, the excess revenue is to be transferred to the Appropriation Contingency Fund. Five million dollars ($5,000,000) is transferred from the Operating Reserve Fund to the Public School State Support Reserve Fund in the eightieth fiscal year. If revenues and transfers to the General Fund… are not sufficient to meet appropriations, the governor, with State Board of Finance approval, may transfer at the end of that year the amount necessary to meet the year's obligations from the unencumbered balance remaining in the General Fund Operating Reserve in a total not to exceed sixty million dollars ($60,000,000).” 

Amendments:

 Amended February 18, 2025

STBTCa/SB 31: The Senate Tax, Business and Transportation Committee amends Senate Bill 31 as follows:

1. On page 5, line 8, strike "two hundred fifty thousand dollars ($250,000)" and insert in lieu thereof "four hundred thousand dollars ($400,000)".