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+FIFTY-SEVENTH LEGISLATURE
+SECOND SESSION, 2026
+February 6, 2026
+Mr. Speaker:
+Your TAXATION & REVENUE COMMITTEE, to whom has beenreferred
 HOUSE BILL 247
-57TH LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2026
-INTRODUCED BY
-Derrick J. Lente
-FOR THE LEGISLATIVE FINANCE COMMITTEE
-AN ACT
-RELATING TO CAPITAL EXPENDITURES; PROVIDING LIMITATIONS AND
-REQUIREMENTS FOR CERTAIN CAPITAL OUTLAY PROJECTS,
-REAUTHORIZATIONS AND APPROPRIATIONS; AMENDING SECTIONS OF LAWS
-2022 THROUGH 2025 TO REQUIRE CERTAIN UNEXPENDED GENERAL FUND
-CAPITAL OUTLAY APPROPRIATIONS TO REVERT TO THE CAPITAL
-DEVELOPMENT AND RESERVE FUND OR THE TRIBAL INFRASTRUCTURE
-PROJECT FUND.
-BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
-SECTION 1.  [NEW MATERIAL] CAPITAL OUTLAY PROJECTS--
-REAUTHORIZATIONS AND APPROPRIATIONS--LIMITATIONS.--
-A.  A capital outlay project shall not be
-reauthorized or reappropriated:
-(1)  more than once;
-(2)  for a time period greater than two years;
-.232379.4
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-and
-(3)  unless at least ten percent of the initial
-appropriation has been encumbered by January 1 of that year, as
-determined by the department of finance and administration.
-B.  A capital outlay project may be reauthorized or
-reappropriated to make a technical change, but a
-reauthorization or reappropriation shall not alter the original
-purpose of the capital outlay project.  A capital outlay
-project that is reauthorized or reappropriated to make a
-technical change is not subject to the encumbrance requirement
-provided in Paragraph (3) of Subsection A of this section.
-C.  Capital outlay authorizations and appropriations
-of one hundred thousand dollars ($100,000) or more shall not be
-made for a project unless the project is included on an
-infrastructure capital improvement plan.
-D.  Capital outlay appropriations made from the
-general fund shall revert to the capital development and
-reserve fund, except for tribal projects that shall revert to
-the tribal infrastructure project fund.
-E.  As used in this section:
-(1)  "encumbrance" includes only direct project
-costs and excludes administrative fees charged by a fiscal
-agent;
-(2)  "purpose" includes the functionality, use
-or primary objective of a project or the type of project or
-.232379.4
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-asset; and
-(3)  "technical change" means a minor
-correction or an adjustment that does not alter the original
-purpose of the capital outlay project and includes correcting a
-drafting error, changing the administering agency, changing the
-fiscal agent or expanding the eligible uses of an appropriation
-within the same project.
-SECTION 2.  [NEW MATERIAL] CAPITAL OUTLAY--WATER
-PROJECTS--LIMITATIONS.--
-A.  A political subdivision of the state shall not
-request a drinking water, wastewater, storm water or dam
-capital project through the legislature's capital outlay
-process.  Political subdivisions shall submit requests for
-funding for those projects to state agencies and
-instrumentalities that administer grant and loan programs for
-drinking water, wastewater, storm water or dam capital
-projects.  The state agencies and instrumentalities may request
-supplemental capital outlay funding for their programs as
-needed through an infrastructure capital improvement plan.
-B.  As used in this section, "state agency" means
-the state or any of its branches, agencies, departments,
-boards, institutions or instrumentalities.
-SECTION 3.  Laws 2022, Chapter 53, Section 2 is amended to
-read:
-"SECTION 2.  GENERAL FUND APPROPRIATIONS--LIMITATIONS--
-.232379.4
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-REVERSIONS.--
-A.  Except as provided in Subsection D of this
-section and as otherwise specifically provided by law, the
-unexpended balance of an appropriation made in this act from
-the general fund shall revert to the general fund:
-(1)  no later than September 30 following:
-(a)  the end of fiscal year 2023 if the
-project for which an appropriation was made has less than five
-percent of the project's total appropriation amount subject to
-a binding written agreement with a third party on that date;
-(b)  the end of fiscal year 2024 for a
-project for which an appropriation was made to purchase
-vehicles, including emergency vehicles and other vehicles that
-require special equipment; heavy equipment; books; educational
-technology; or other equipment or furniture that is not related
-to a more inclusive construction or renovation project; or
-(c)  the end of fiscal year 2026 for a
-project for which an appropriation was made related to an
-inclusive construction or renovation project; or
-(2)  within six months of completion of the
-project for any other project for which an appropriation was
-made, but no later than the end of fiscal year 2026.
-B.  Money that is appropriated from the general fund
-pursuant to this act shall not be subject to a binding written
-agreement with a third party prior to the authorized state
-.232379.4
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-agency's approval to enter into that agreement.
-C.  For the purposes of this section, "unexpended
-balance" means the remainder of an appropriation after
-reserving for unpaid costs and expenses subject to a binding
-written agreement with a third party.
-D.  The unexpended balance of an appropriation made
-in this act from the general fund that has not reverted on or
-before the effective date of this 2026 act shall revert in the
-time frame set forth in Subsection A of this section to the
-capital development and reserve fund, except for tribal
-projects that shall revert to the tribal infrastructure project
-fund."
-SECTION 4.  Laws 2023, Chapter 199, Section 1 is amended
-to read:
-"SECTION 1.  GENERAL FUND APPROPRIATIONS--LIMITATIONS--
-REVERSIONS.--
-A.  Except as provided in Subsection E of this
-section and as otherwise specifically provided by law, the
-unexpended balance of an appropriation made in this act from
-the general fund shall revert to the general fund:
-(1)  no later than September 30 following:
-(a)  the end of fiscal year 2024 if the
-project for which an appropriation was made has less than five
-percent of the project's total appropriation amount subject to
-a binding written agreement with a third party on that date;
-.232379.4
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-(b)  the end of fiscal year 2025 for a
-project for which an appropriation was made to purchase
-vehicles, including emergency vehicles and other vehicles that
-require special equipment; heavy equipment; books; educational
-technology; or other equipment or furniture that is not related
-to a more inclusive construction or renovation project; or
-(c)  the end of fiscal year 2027 for a
-project for which an appropriation was made related to an
-inclusive construction or renovation project; or
-(2)  within six months of completion of the
-project for any other project for which an appropriation was
-made, but no later than the end of fiscal year 2027.
-B.  Except for appropriations to the capital program
-fund, money from appropriations made in this act shall not be
-used to pay indirect project costs.
-C.  Money that is appropriated from the general fund
-pursuant to this act shall not be subject to a binding written
-agreement with a third party prior to the authorized state
-agency's approval to enter into that agreement.
-D.  For the purposes of this section, "unexpended
-balance" means the remainder of an appropriation after
-reserving for unpaid costs and expenses subject to a binding
-written agreement with a third party.
-E.  The unexpended balance of an appropriation made
-in this act from the general fund that has not reverted on or
-.232379.4
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-before the effective date of this 2026 act shall revert in the
-time frame set forth in Subsection A of this section to the
-capital development and reserve fund, except for tribal
-projects that shall revert to the tribal infrastructure project
-fund."
-SECTION 5.  Laws 2024, Chapter 66, Section 1 is amended to
-read:
-"SECTION 1.  GENERAL FUND APPROPRIATIONS--LIMITATIONS--
-REVERSIONS.--
-A.  Except as provided in Subsection E of this
-section and as otherwise specifically provided by law, the
-unexpended balance of an appropriation made in this act from
-the general fund shall revert to the general fund:
-(1)  no later than September 30 following:
-(a)  the end of fiscal year 2026 for a
-project for which an appropriation was made to purchase
-vehicles, including emergency vehicles and other vehicles that
-require special equipment; heavy equipment; books; educational
-technology; or other equipment or furniture that is not related
-to a more inclusive construction or renovation project; or
-(b)  the end of fiscal year 2028 for a
-project for which an appropriation was made related to an
-inclusive construction or renovation project; or
-(2)  within six months of completion of the
-project for any other project for which an appropriation was
-.232379.4
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-made, but no later than the end of fiscal year 2028.
-B.  The agencies named in this act shall certify to
-the department of finance and administration that the money
-appropriated in this act is needed for the purposes specified
-in the applicable section of this act.  If an agency has not
-certified the need for the appropriation for a particular
-project by the end of fiscal year 2026, the authorization for
-that project is void.
-C.  Money that is appropriated from the general fund
-pursuant to this act shall not be subject to a binding written
-agreement with a third party prior to the authorized state
-agency's approval to enter into that agreement.
-D.  For the purposes of this section, "unexpended
-balance" means the remainder of an appropriation after
-reserving for unpaid costs and expenses subject to a binding
-written agreement with a third party.
-E.  The unexpended balance of an appropriation made
-in this act from the general fund that has not reverted on or
-before the effective date of this 2026 act shall revert in the
-time frame set forth in Subsection A of this section to the
-capital development and reserve fund, except for tribal
-projects that shall revert to the tribal infrastructure project
-fund."
-SECTION 6.  Laws 2025, Chapter 159, Section 2 is amended
-to read:
-.232379.4
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-"SECTION 2.  GENERAL FUND APPROPRIATIONS--LIMITATIONS--
-REVERSIONS.--
-A.  Except as provided in Subsection E of this
-section and as otherwise specifically provided by law, general
-fund appropriations made pursuant to this act may be expended
-in fiscal years 2026 through 2029; provided that the unexpended
-balance of an appropriation made in this act from the general
-fund shall revert to the general fund:
-(1)  no later than September 30 following:
-(a)  the end of fiscal year 2027 for a
-project for which an appropriation was made to purchase
-vehicles, including emergency vehicles and other vehicles that
-require special equipment; heavy equipment; books; educational
-technology; or other equipment or furniture that is not related
-to a more inclusive construction or renovation project; or
-(b)  the end of fiscal year 2029 for a
-project for which an appropriation was made related to an
-inclusive construction or renovation project; or
-(2)  within six months of completion of the
-project for any other project for which an appropriation was
-made, but no later than the end of fiscal year 2029.
-B.  The agencies named in this act shall certify to
-the department of finance and administration that the money
-appropriated in this act is needed for the purposes specified
-in the applicable section of this act.  If an agency has not
-.232379.4
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-certified the need for the appropriation for a particular
-project by the end of fiscal year 2027, the authorization for
-that project is void.
-C.  Money that is appropriated from the general fund
-pursuant to this act shall not be subject to a binding written
-agreement with a third party prior to the authorized state
-agency's approval to enter into that agreement.
-D.  For the purposes of this section, "unexpended
-balance" means the remainder of an appropriation after
-reserving for unpaid costs and expenses subject to a binding
-written agreement with a third party.
-E.  The unexpended balance of an appropriation made
-in this act from the general fund that has not reverted on or
-before the effective date of this 2026 act shall revert in the
-time frame set forth in Subsection A of this section to the
-capital development and reserve fund, except for tribal
-projects that shall revert to the tribal infrastructure project
-fund."
-SECTION 7.  APPLICABILITY.--The provisions of Sections 1
-and 2 of this act apply to capital outlay appropriations made
-on or after January 1, 2027.
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-.232379.4
+has had it under consideration and reports same withrecommendation that it DO PASS, amended as follows:
+1.  On page 2, between lines 19 and 20, insert:
+"E.  If severance tax bonds have been issued and no
+amount of the proceeds have been encumbered or expended for a
+capital outlay project for which bonds were issued by January 1 of
+the fiscal year in which unexpended balances will revert, the board
+of finance division of the department of finance and administration
+shall freeze the account, and any encumbrances after that date shall
+be considered invalid.  If no amount has been encumbered or expended
+for a capital outlay appropriation from the general fund or other
+state funds by January 1 of the fiscal year in which the unexpended
+balance will revert, the department shall freeze the account, and
+any encumbrances after that date shall be considered invalid.  An
+expenditure does not include a lawful, automatic deduction from the
+total proceeds or appropriation.
+
+F.  The department of finance and administration shall
+provide an annual report to the legislature by January 15 on the
+capital outlay projects that have been frozen.  The balances of
+frozen accounts shall be available for authorization or
+appropriation in that fiscal year for other purposes, subject to any
+applicable rules and state board of finance oversight of severance
+tax bonds.".
+2.  Reletter the succeeding subsection accordingly.
+3.  On page 3, strike lines 8 through 22.
+4.  Renumber the succeeding sections accordingly.
+5.  On page 10, lines 19 and 20, strike "Sections 1 and 2" and
+insert in lieu thereof "Section 1".
+FIFTY-SEVENTH LEGISLATURE
+SECOND SESSION, 2026
+HTRC/HB 247 Page 2
+Respectfully submitted
+
+DERRICK J. LENTE, CHAIR
+Adopted                        Not Adopted
+(Chief Clerk) (Chief Clerk)
+Date
+The roll call vote was  11  For  0  Against
+Yes: Cadena, Chandler, Duncan, Gallegos, Henry, Hernandez, JN,
+Lente, Montoya, Parajón, Silva, Terrazas
+No: 0
+Excused: Lundstrom, Martínez, J.
+Absent: None
+.233838.2
+HB0247TR1.wpd
+VoteKey: 492