New Mexico House Bill HB71

New Mexico 2025 Regular Session

• Introduced: 1/21/25
• Report Pass: 2/14/25
• Report Pass: 2/21/25
• Engrossed: 3/12/25
• Report Pass: 3/18/25
• Enrolled: 3/20/25
• Chaptered: 4/7/25
• Passed: 4/7/25

Caption

Early Childhood Ed & Care Fund Transfers

Summary

HB71 revises several state revenue-transfer formulas tied to excess extraction taxes and federal mineral leasing receipts. The bill directs that, after reserve requirements are met, excess oil and gas extraction tax revenue be split between the Early Childhood Education and Care Fund and the Behavioral Health Trust Fund for fiscal years 2026 through 2028, then directed entirely to the Early Childhood Education and Care Fund beginning in fiscal year 2029. It also increases the annual distribution from the Early Childhood Education and Care Fund to the Early Childhood Education and Care Program Fund to the greater of 5 percent of the fund’s three-year average market value or $500 million. The bill adds reporting requirements for the use of money in the Early Childhood Education and Care Program Fund, requiring the state auditor to report annually on expenditures beginning in 2025. It also changes how excess federal Mineral Leasing Act receipts are distributed: for fiscal years 2026 through 2028, excess amounts are split between the Early Childhood Education and Care Fund and a Medicaid trust fund, then shifted entirely to the Early Childhood Education and Care Fund in fiscal year 2029 and later. A contingent effective-date provision ties part of the bill to enactment of separate legislation creating the Medicaid trust fund. In practical terms, HB71 alters the flow of state revenue among several major funds, increasing long-term support for early childhood programs while also providing temporary support for behavioral health and Medicaid-related funding. It preserves the state’s reserve-first approach by requiring transfers to the tax stabilization reserve before any other distributions from excess extraction tax revenue. The bill also leaves the severance tax permanent fund as the recipient of any remaining balances after the specified transfers. The overall sentiment around the bill appears strongly favorable. It passed the House 65-3 and the Senate 35-0, indicating broad bipartisan support and little recorded opposition. The lack of committee transcript material suggests no major public controversy was captured in the available record. The main points of potential contention are fiscal and policy prioritization issues: how much excess revenue should go to early childhood education versus behavioral health or Medicaid, and whether the bill’s increased annual distribution from the early childhood fund is sustainable over time. The contingent Medicaid provisions also depend on separate legislation, which could be a point of uncertainty, but the recorded votes show that lawmakers largely accepted the package as a revenue-allocation measure.

Impact

HB71 amends New Mexico statutes governing the excess extraction taxes suspense fund, the early childhood education and care fund, the early childhood education and care program fund, and the distribution of federal Mineral Leasing Act receipts. It changes the statutory allocation of excess revenues, increases the required annual transfer from the early childhood education and care fund to the program fund, and adds annual expenditure reporting by the state auditor. The bill also creates a temporary and then permanent revenue path for excess mineral leasing receipts to support a Medicaid trust fund and later the early childhood education and care fund, depending on enactment of related legislation.

Sentiment

The bill appears to have been viewed positively and as a broadly acceptable budget and funding measure. It passed both chambers with overwhelming margins, including unanimous Senate passage, which suggests strong support for directing additional revenue to early childhood education and care while also addressing behavioral health and Medicaid funding needs. No committee debate is available in the provided record, and the vote totals indicate little organized opposition.

Contention

Any contention would likely center on competing priorities for excess state revenue: early childhood education and care, behavioral health, Medicaid, and long-term reserve or permanent fund growth. The bill’s phased approach—splitting excess extraction tax revenue for a few years before shifting it entirely to early childhood funding—may reflect a compromise among those interests. Another possible point of concern is the contingent Medicaid trust fund language, which depends on separate legislation, creating uncertainty about whether the mineral leasing distribution changes will fully take effect as intended.