Summary:

 House Bill 450 (HB 450) authorizes the issuance of severance tax bonds, appropriates general fund and other state fund balances for capital projects, and establishes conditions for bond issuance, project certification, and reversion of unexpended funds. The bill provides specific funding for infrastructure projects across multiple agencies, including the University of New Mexico, the Border Authority, and the Public Education Department. HB 450 declares an emergency, making it effective immediately upon passage and approval.
 

Legislation Overview:

 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. 

Current Law:

 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.