New Mexico Legislative Update SB116 Tobacco Settlement Permanent Fund Status Passed Senate

The New Mexico legislature has 5 days to go of their session and the scramble begins to pass legislation as the clock winds down. In a 38-0 vote the Senate moved bill SB116 forward which would move the tobacco settlement permanent fund out of the state’s reserves and into a fund that will get a better return on investment.

Senate Bill 116 (SB116) provides that the Tobacco Settlement Permanent Fund (TSPF) is not a Reserve Fund of the state. An annual distribution would be made each year from the TSPF to the Tobacco Settlement Program Fund. The Bill amends the distribution amount to four and seventh-tenths percent of the average of the year-end market values of the TSPF, calculated over the preceding five calendar years. If this distribution amount in a given fiscal year is insufficient to meet appropriations for the fiscal year, then the secretary of finance and administration shall proportionately reduce each appropriation accordingly. 

Senate Bill 116 (SB116) provides that the Tobacco Settlement Permanent Fund (TSPF) is not a Reserve Fund of the state. An annual distribution would be made each year from the TSPF to the Tobacco Settlement Program Fund. The Bill amends the distribution amount to four and seventh-tenths percent of the average of the year-end market values of the TSPF, calculated over the preceding five calendar years. If this distribution amount in a given fiscal year is insufficient to meet appropriations for the fiscal year, then the secretary of finance and administration shall proportionately reduce each appropriation accordingly.

The Health Care Authority (HCA) receives an annual appropriation from the Tobacco Settlement Program Fund. The Table below shows amounts appropriated to HCA program areas over the past three Fiscal years (in thousands of $s). In SFY 2024 HCA received additional funding in the annual appropriation from the Tobacco Settlement Program Fund. The appropriation amounts accruing to HCA under SB 116 are uncertain (TBD), depending on the year-end market values of the TSPF. In the event these values are relatively high, then HCA might anticipate additional funds transfers as occurred in SFY 2024. Otherwise, the transfer amounts to HCA from the Tobacco Settlement Program Fund will reduce the Operating Budget of Medicaid/CHIP programs.

If the distribution amounts to the HCA are reduced, then the HCA will require general fund to make up the shortfall. 

The bill now heads to the house floor for discussion and a vote.

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