Summary:

 Senate Bill 289 (SB 289) adjusts the distribution of motor vehicle excise tax revenue, increasing the percentage allocated to the State Road Fund and the Transportation Project Fund while reducing the portion directed to the General Fund. The bill takes effect on July 1, 2026. 

Legislation Overview:

 Senate Bill 289 (SB 289) amends Section 7-14-10 NMSA 1978, which governs the distribution of motor vehicle excise tax revenue. The bill reduces the share allocated to the General Fund from 59.39% to 10%, while increasing the allocation to the State Road Fund from 21.86% to 65%. Additionally, the share directed to the Transportation Project Fund increases from 18.75% to 25%.

The bill does not change the overall tax rate but redistributes the revenue toward infrastructure investments, prioritizing road maintenance, transportation projects, and highway improvements.

Implications
SB 289 significantly increases funding for road infrastructure projects by redirecting vehicle excise tax revenue to the State Road Fund and the Transportation Project Fund. This change will enhance road maintenance, expand highway projects, and improve public transportation infrastructure. However, the reduction in General Fund revenue may require budget adjustments to offset losses in other state-funded programs.

The shift in funding allocations aligns with long-term transportation priorities, ensuring that motor vehicle-related taxes are reinvested in transportation infrastructure. The fiscal impact will depend on overall vehicle sales, but the bill is expected to increase stability in transportation funding while reducing the state’s reliance on discretionary appropriations for road projects.
 

Current Law:

 Currently, motor vehicle excise tax revenue is primarily allocated to the General Fund (59.39%), with smaller portions going to the State Road Fund (21.86%) and the Transportation Project Fund (18.75%). SB 289 reallocates these funds, prioritizing road and transportation investments over general state expenditures.