The House Taxation and Revenue Committee substitute bill for House Bill 450 (HTRCcs/HB 450) authorizes the issuance of Severance Tax Bonds and appropriates funds from the General Fund and other sources for capital expenditures across New Mexico. The bill establishes conditions for bond issuance, appropriates bond proceeds for projects, and outlines certification requirements for the Department of Finance and Administration (DFA). It also sets deadlines for expenditure and the reversion of unspent funds. The bill allocates funds for projects in public safety, infrastructure, education, health care, state facilities, tribal communities, and water systems. HB 450 declares an emergency, making it effective immediately upon passage and approval. 

 House Bill 450 (HB 450) allows the State Board of Finance to issue and sell severance tax bonds in amounts necessary to fund the capital projects listed in this bill. These bonds must be issued in the most expeditious and economical manner possible, with the condition that the project has been developed sufficiently to justify bond issuance and that work can begin within a reasonable timeframe. The state must also ensure compliance with the Internal Revenue Code regarding tax-exempt bond use.

The bill specifies certification requirements for agencies requesting bond proceeds. If an agency fails to certify the need for funds by the end of Fiscal Year 2027, the authorization for that project becomes void. Additionally, agencies must ensure that they incur a binding financial obligation for at least 5% of the bond proceeds within six months of issuance and spend at least 85% of the funds within three years.

HB 450 also establishes reversion dates for severance tax bond appropriations. Unexpended balances will revert to the severance tax bonding fund based on the following conditions:
	• For federal matching projects, funds revert six months after project completion.
	• For vehicles, emergency vehicles, equipment, and educational technology, funds revert two years after issuance.
	• For all other projects, funds revert six months after project completion but no later than Fiscal Year 2029.

Additionally, general fund appropriations for capital projects will revert by specific deadlines, unless otherwise provided by law. Agencies must certify the need for funds, and any unexpended balances will be returned to their originating funds.

Among the major capital projects funded by HB 450 are:
	• $25,000,000 to the University of New Mexico (UNM) for renovations to the Health Sciences Center College of Pharmacy in Albuquerque, Bernalillo County.
	• $1,700,000 to the Border Authority for a water storage tank at the Columbus Port of Entry in Luna County.
	• $1,500,000 from the Public School Capital Outlay Fund for fueling and charging stations for alternatively fueled school buses statewide.

The bill also includes a provision allowing partial expenditure of appropriations if a project cannot be fully completed with the allocated funds, ensuring that funds can still be used for portions of a project even if full completion is not feasible.

Finally, HB 450 requires that 1% of applicable appropriations be allocated to the Art in Public Places Fund, in accordance with state law. The bill declares an emergency, meaning it takes effect immediately upon passage.

Implications

HB 450 ensures continued capital investment in New Mexico’s infrastructure, particularly in higher education, transportation, and public utilities. The severance tax bond issuance provides a structured funding mechanism for major projects, while general fund appropriations allow for targeted capital improvements. The bill’s certification and expenditure deadlines are designed to prevent funding delays or misallocation, ensuring that projects proceed in a timely manner or that funds are reverted for future use.

By allocating $25,000,000 for renovations at the UNM Health Sciences Center College of Pharmacy, the bill supports the expansion of medical education and research facilities, which could help address New Mexico’s ongoing health care workforce shortages. The $1,700,000 for a water storage tank at the Columbus Port of Entry represents a strategic investment in border infrastructure, potentially improving water access and supply chain efficiency in the region. The funding for alternative fuel school bus infrastructure aligns with statewide sustainability and clean energy initiatives.

The reversion requirements and binding financial obligation provisions help prevent unused funds from sitting idle, while the emergency declaration ensures that projects can proceed without delay. However, requiring agencies to certify projects by 2027 may put pressure on local governments and institutions to finalize project plans quickly or risk losing funding. Additionally, while the bill provides funding for several high-impact projects, it does not specify funding for long-term maintenance, meaning future appropriations may be needed to sustain the infrastructure being developed. 

 Under current law, the State Board of Finance is responsible for issuing severance tax bonds to finance capital projects, with unexpended balances reverting to the bonding fund under specific timelines. The Capital Outlay Process generally follows similar certification and reversion requirements, but HB 450 establishes updated timelines and conditions to ensure that funds are used efficiently. 

 Committee Substitute March 19, 2025 in HTRC

HTRCcs/HB 450: The House Taxation and Revenue Committee substitute bill provides for the issuance of Severance Tax Bonds in amounts specified for various capital projects, ensuring bond issuance is conducted in a fiscally responsible manner. The bill mandates agencies to certify the need for bond proceeds before funds are released. Agencies must spend 85% of bond proceeds within three years, or the authorization for those projects will be void. Funds not used by the end of Fiscal Year 2029 will revert to the Severance Tax Bonding Fund.

The bill allocates General Fund appropriations for infrastructure improvements, facility upgrades, vehicle purchases, water and wastewater projects, emergency services, and public safety enhancements across all counties. Projects include renovations of state-owned buildings, university expansions, road and bridge improvements, and new law enforcement and fire station facilities. Funds are also directed toward tribal infrastructure projects, including water systems, cultural centers, and public safety improvements.

HTRCcs/HB 450 establishes specific reversion timelines based on project type, with stricter deadlines for equipment and vehicle purchases and more extended timelines for construction and renovation projects. The bill includes additional appropriations for public education, supporting classroom expansions, playground enhancements, security upgrades, and vocational training programs. Funding is also designated for higher education institutions, with allocations for campus renovations, water system improvements, and technical education facilities.

Grouped Projects by County
HB 450 includes a large volume of appropriations, which are distributed across all counties. For clarity, the following summarizes the total appropriations by county, grouping projects within each:
   •	Bernalillo County: Funding for higher education, emergency services, cultural institutions, law enforcement, road improvements, water projects, and school facility renovations.
   •	Doña Ana County: Infrastructure and public education expansions, water system improvements, and emergency services enhancements.
   •	Santa Fe County: University and school upgrades, water infrastructure, historical site renovations, and public service enhancements.
   •	McKinley County: Tribal projects, emergency service expansions, and water and infrastructure projects.
   •	San Juan County: Public school and higher education projects, water system improvements, and public safety funding.
   •	Sandoval County: Funding for tribal infrastructure, education, and municipal improvements.
   •	Other Counties: Statewide funding for infrastructure, roads, emergency response, and public safety, ensuring equitable distribution of resources across urban and rural areas.

HB 450 takes effect immediately upon passage due to its emergency declaration.

Implications
HTRCcs/HB 450 represents a significant investment in public infrastructure and community development, distributing funding to counties for statewide capital improvements. The reliance on Severance Tax Bonds aligns with New Mexico’s broader financial strategy but requires careful oversight to ensure efficient fund utilization. The General Fund appropriations supplement bond funding but will impact state revenue reserves, necessitating careful budget planning in future legislative sessions.

By directing funding toward education, health care, and emergency response, HB 450 supports long-term economic and social benefits. However, the bill’s large number of appropriations requires agencies to demonstrate project readiness to avoid fund reversions. Increased oversight may be necessary to monitor compliance with bond expenditure deadlines and ensure projects progress efficiently.

The focus on tribal infrastructure, water management, and emergency preparedness reflects legislative priorities on rural and underserved communities, but delays in project execution could lead to funding lapses. Additionally, increased severance tax bonding may affect future state borrowing capacity, making debt management strategies critical in subsequent fiscal years.