SENATE BILL 223

56th legislature - STATE OF NEW MEXICO - second session, 2024

INTRODUCED BY

William E. Sharer

 

 

 

 

 

AN ACT

RELATING TO PUBLIC FINANCE; CREATING THE MEDICAID TRUST FUND AND THE STATE-SUPPORTED MEDICAID FUND; CHANGING DISTRIBUTIONS OF CERTAIN OIL AND GAS EMERGENCY SCHOOL TAX REVENUE AND FEDERAL MINERAL LEASING ACT REVENUE FROM THE EARLY CHILDHOOD EDUCATION AND CARE FUND TO THE NEW MEDICAID TRUST FUND; SUBJECTING THE DISTRIBUTION TO A LIMITATION.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new section of Chapter 6, Article 4 NMSA 1978 is enacted to read:

     "[NEW MATERIAL] MEDICAID TRUST FUND.--

          A. The "medicaid trust fund" is created within the state treasury. The fund consists of distributions, appropriations, gifts, grants and donations. Income from investment of the fund shall be credited to the fund. Money in the fund shall be expended only as provided in this section.

          B. The state investment officer, subject to the approval of the state investment council, shall invest money in the fund:

                (1) in accordance with the prudent investor rule set forth in the Uniform Prudent Investor Act; and

                (2) in consultation with the state treasurer.

          C. The state investment officer shall report quarterly to the legislative finance committee and the state investment council on the investments made pursuant to this section. Annually, a report shall be submitted no later than October 1 to the legislative finance committee, the

revenue stabilization and tax policy committee and any other appropriate interim committees.

          D. On July 1 of each year, a distribution shall be made from the trust fund to the state-supported medicaid fund in an amount equal to five percent of the average of the year- end market values of the trust fund for the immediately preceding three calendar years. If, on July 1 of a year, the trust fund has been in effect for less than three calendar years, the distribution shall be in an amount equal to five percent of the average of the year-end market values of the trust fund for the immediately preceding number of calendar years that the trust fund has been in effect.

          E. In addition to the distribution pursuant to Subsection D of this section, money in the medicaid trust fund may be expended in the event that general fund balances, including all authorized revenues and transfers to the general fund and balances in the general fund operating reserve, the appropriation contingency fund and the tax stabilization reserve, will not meet the level of appropriations authorized from the general fund for a fiscal year. In that event, to avoid an unconstitutional deficit, the legislature may appropriate from the trust fund to the general fund only in the amount necessary to meet general fund appropriations for that fiscal year and only if the legislature has authorized transfers from the appropriation contingency fund, the general fund operating reserve and the tax stabilization reserve that exhaust those fund balances."

     SECTION 2. [NEW MATERIAL] STATE-SUPPORTED MEDICAID FUND.--The "state-supported medicaid fund" is created as a nonreverting fund in the state treasury. The fund consists of distributions, appropriations, gifts, grants and donations. Income from investment of the fund shall be credited to the fund. The health care authority department shall administer the fund. Money in the fund is subject to appropriation by the legislature to support the state medicaid program and to match federal funds for the state medicaid program. Expenditures from the fund shall be by warrant of the secretary of finance and administration pursuant to vouchers signed by the secretary of health care authority or the secretary's authorized representative.

     SECTION 3. That version of Section 6-4-27 NMSA 1978 (being Laws 2020, Chapter 3, Section 4, as amended) that is to become effective July 1, 2024 is amended to read:

     "6-4-27. EXCESS EXTRACTION TAXES SUSPENSE FUND--TRANSFER OF EXCESS OIL AND GAS EMERGENCY SCHOOL TAX REVENUE--TAX STABILIZATION RESERVE--[EARLY CHILDHOOD EDUCATION AND CARE] MEDICAID TRUST FUND--SEVERANCE TAX PERMANENT FUND.--

          A. The "excess extraction taxes suspense fund" is created as a nonreverting fund in the state treasury. Money in the fund shall only be used to make transfers by the department of finance and administration as required by this section.

          B. At the end of each fiscal year, the department of finance and administration shall calculate and transfer the balance of the fund attributable to that fiscal year as follows:

                (1) if in the current fiscal year the total net receipts attributable to the tax imposed pursuant to Section 7-31-4 NMSA 1978 and distributed pursuant to Section 7-1-6.20 NMSA 1978 exceed the annual average amount, the department shall distribute the excess amount above the annual average amount as follows:

                     (a) to the tax stabilization reserve, the amount necessary to bring the balance of state reserves to a level equal to twenty-five percent of the aggregate recurring appropriations for that fiscal year from the general fund, as determined by the department; provided that, if the balance in the excess extraction taxes suspense fund is not sufficient to meet that level, the entire balance shall be transferred to the tax stabilization reserve; and

                     (b) to the [early childhood education and care] medicaid trust fund, the balance of the excess amount above the annual average amount, if any, after the transfer is made pursuant to Subparagraph (a) of this paragraph; provided that, if a distribution from the medicaid trust fund to the state-supported medicaid fund in the previous fiscal year is an amount equal to or greater than one-half of the amount appropriated for the state medicaid program for that fiscal year, no further transfer pursuant to this subparagraph shall be made; and

                (2) the remaining balance of the fund, if any, shall be distributed to the severance tax permanent fund.

          C. As used in this section:

                (1) "annual average amount" means the total net receipts attributable to the tax imposed pursuant to Section 7-31-4 NMSA 1978 and distributed pursuant to Section 7-1-6.20 NMSA 1978 in the immediately preceding five fiscal years, divided by five; and

                (2) "state reserves" means the general fund balances, as determined by the department of finance and administration, including all authorized revenues and transfers to the general fund and balances in the appropriation contingency fund, the general fund operating reserve, the state-support reserve fund and the tax stabilization reserve."

     SECTION 4. That version of Section 9-29A-3 NMSA 1978 (being Laws 2020, Chapter 3, Section 3, as amended) that is to become effective July 1, 2024 is recompiled as Section 6-4-30 NMSA 1978 and is amended to read:

     "6-4-30. DISTRIBUTION--[EARLY CHILDHOOD EDUCATION AND CARE] MEDICAID TRUST FUND--SEVERANCE TAX PERMANENT FUND--PAYMENTS PURSUANT TO FEDERAL MINERAL LEASING ACT.--

          A. If, by June 30 of each fiscal year, the net receipts for that fiscal year of the money received by the state pursuant to the federal Mineral Leasing Act exceed the annual average amount, the excess amount above the annual average amount shall be distributed to the [early childhood education and care] medicaid trust fund and attributed to that fiscal year; provided that, if a distribution from the medicaid trust fund to the state-supported medicaid fund is sufficient to meet one-half of the funding needed for the state medicaid program for the following fiscal year, as determined by the department of finance and administration in consultation with the legislative finance committee, no further distribution pursuant to this subsection shall be made.

          B. If, by June 30, 2025, and by June 30 of each fiscal year thereafter, the remaining amount of the net receipts for that fiscal year of the money received by the state pursuant to the federal Mineral Leasing Act after the distribution pursuant to Subsection A of this section exceeds the threshold amount, the excess shall be distributed to the severance tax permanent fund.

          C. The department of finance and administration shall make the calculations to determine if excess amounts shall be distributed pursuant to this section. If there is an excess amount, the distribution shall be made as soon as practicable. If there is not an excess amount, no distribution shall be made.

          D. As used in this section:

                (1) "annual average amount" means the total net receipts attributable to money received by the state pursuant to the federal Mineral Leasing Act in the immediately preceding five fiscal years, divided by five; and

                (2) "threshold amount" means the net receipts of the money received by the state pursuant to the federal Mineral Leasing Act distributed in fiscal year 2024 pursuant to Subsection B of Section 22-8-34 NMSA 1978."

     SECTION 5. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2024.

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