SENATE BILL 397
57th legislature - STATE OF NEW MEXICO - first session, 2025
INTRODUCED BY
Antonio Maestas and Leo Jaramillo
AN ACT
RELATING TO PUBLIC BENEFITS; ENACTING THE NEW MEXICO NEXT GENERATION ACT; CREATING THE NEXT GENERATION TRUST FUND AND PROVIDING FOR INVESTMENT OF THAT FUND BY THE STATE INVESTMENT OFFICER; CREATING THE BABY BONDS FUND AND REQUIRING THE DEPARTMENT OF FINANCE AND ADMINISTRATION TO PROMULGATE RULES FOR ADMINISTRATION OF THAT FUND AND THE NEW MEXICO NEXT GENERATION ACT; PROVIDING THAT BENEFITS SHALL NOT BE GUARANTEED AND THAT A PROPERTY INTEREST SHALL NOT BE CREATED BY THE NEW MEXICO NEXT GENERATION ACT; EXEMPTING FROM THE STATE INCOME TAX ANY MONEY SPENT FOR BENEFICIARIES PURSUANT TO THE NEW MEXICO NEXT GENERATION ACT; REQUIRING INFORMATION SHARING WITH THE DEPARTMENT OF FINANCE AND ADMINISTRATION; MAKING APPROPRIATIONS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 9 of this act may be cited as the "New Mexico Next Generation Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the New Mexico Next Generation Act:
A. "beneficiary" means a person born in New Mexico on or after July 1, 2025 who:
(1) has a parent who has resided in New Mexico for at least five consecutive years immediately preceding the person's birth; or
(2) while under the age of eighteen, is placed:
(a) in the care and custody of the protective services division of the children, youth and families department either under the legal authorization of the Children's Code or through a voluntary placement agreement signed by the person's parent or legal guardian; or
(b) with a licensed child placement agency under the authority of the Child Placement Agency Licensing Act;
B. "educational expenses" means tuition and fees, student housing, school supplies or other related expenses for a public post-secondary educational institution or for vocational training through apprenticeship and training programs in New Mexico that are recognized by the office of apprenticeship of the employment and training administration of the United States department of labor, the state apprenticeship office of the workforce solutions department or the apprenticeship council;
C. "eligible expenditure" means an expenditure on behalf of a beneficiary for educational expenses or for a down payment to purchase a residence in New Mexico that is made in accordance with New Mexico law and rules promulgated by the department of finance and administration; and
D. "parent" means a biological or adoptive parent of a child whose parental rights have not been terminated.
SECTION 3. [NEW MATERIAL] NEW MEXICO NEXT GENERATION PROGRAM--ELIGIBILITY--CLAIM.--A beneficiary who is between eighteen and forty years of age and who has successfully completed a financial literacy course approved by the state treasurer may submit a claim to the department of finance and administration for that department to make an eligible expenditure on behalf of the beneficiary. The claim shall be on forms and in the manner prescribed by that department.
SECTION 4. [NEW MATERIAL] NEXT GENERATION TRUST FUND.--
A. The "next generation trust fund" is created as a nonreverting fund in the state treasury. The purpose of the fund is to establish and grow a source of funding to distribute to the baby bonds fund. The next generation trust fund consists of distributions, transfers, appropriations, gifts, grants, donations, bequests and income from investment of the fund. The state investment officer shall invest money in the fund in accordance with the prudent investor rule set forth in the Uniform Prudent Investor Act and in consultation with the state treasurer. Earnings from investment of the fund shall be credited to the fund. Money in the fund is subject to appropriation by the legislature and shall be expended only as provided for in the New Mexico Next Generation Act.
B. On July 1, 2043 and each July 1 thereafter, a distribution shall be made from the next generation trust fund to the baby bonds fund in an amount, to be determined by the department of finance and administration in consultation with the state investment officer, based on the number of beneficiaries that will become eligible and the anticipated eligible expenditures that will be made in that fiscal year. A determination of the distribution amount shall take into account the balance of and projected earnings and expenditures from the baby bonds fund.
SECTION 5. [NEW MATERIAL] BABY BONDS FUND.--
A. The "baby bonds fund" is created in the state treasury. The purpose of the baby bonds fund is to establish for beneficiaries a resource for educational and housing assistance, while simultaneously supporting the state's economic development and well-being. The fund consists of distributions made to the fund from the next generation trust fund and other distributions, transfers, appropriations, gifts, grants, donations, bequests and income from investment of the fund. Money in the fund is appropriated to the department of finance and administration to make eligible expenditures on behalf of beneficiaries pursuant to the New Mexico Next Generation Act. The department of finance and administration shall administer the fund, and expenditures from the fund shall be by warrant of the secretary of finance and administration pursuant to vouchers signed by the secretary or the secretary's authorized representative.
B. By May 1, 2043 and on each May 1 thereafter, the department of finance and administration, in consultation with the department of health and the children, youth and families department, shall project the amount of eligible expenditures required for the upcoming fiscal year and provide its projection to the state investment officer.
SECTION 6. [NEW MATERIAL] INFORMATION SHARING.--On or after July 1, 2025, the vital records and health statistics bureau of the department of health and the children, youth and families department shall enter into an agreement with the department of finance and administration to provide to the department of finance and administration any information necessary to determine or verify the identity or number of beneficiaries that may be eligible for assistance pursuant to the New Mexico Next Generation Act. The vital records and health statistics bureau of the department of health and the children, youth and families department shall provide to the department of finance and administration any information that is required pursuant to that agreement.
SECTION 7. [NEW MATERIAL] RULEMAKING BY DEPARTMENT OF FINANCE AND ADMINISTRATION.--The department of finance and administration shall promulgate rules necessary for the administration of the baby bonds fund and the New Mexico Next Generation Act. The rules shall include requirements for:
A. determining a person's status as a beneficiary;
B. determining whether a proposed expenditure on behalf of a beneficiary constitutes an eligible expenditure;
C. an accounting of benefits available to individual beneficiaries; and
D. any other procedures necessary for administration of the baby bonds fund and the New Mexico Next Generation Act.
SECTION 8. [NEW MATERIAL] NO GUARANTEE OF BENEFITS OR
ENFORCEABLE INTEREST.--The provisions of the New Mexico Next Generation Act do not guarantee any benefits and shall not be construed to create an interest in property that is enforceable under state law or that does not otherwise exist.
SECTION 9. [NEW MATERIAL] DESIGNATED BENEFICIARY'S ELIGIBILITY FOR NEED-BASED ASSISTANCE.--Except as provided by federal law, money in the next generation trust fund and the baby bonds fund shall not be considered an asset for the purposes of determining a beneficiary's eligibility for need-based public assistance programs, grants or aid.
SECTION 10. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] EXEMPTION--NEW MEXICO NEXT GENERATION ACT.--
A. Money expended on behalf of a beneficiary pursuant to the New Mexico Next Generation Act is exempt from state income taxation.
B. As used in this section, "beneficiary" means a person born in New Mexico on or after July 1, 2025 who:
(1) has a parent who has resided in New Mexico for at least five consecutive years immediately preceding the person's birth; or
(2) while under the age of eighteen, is placed:
(a) in the care and custody of the protective services division of the children, youth and families department either under the legal authorization of the Children's Code or through a voluntary placement agreement signed by the person's parent or legal guardian; or
(b) with a licensed child placement agency under the authority of the Child Placement Agency Licensing Act."
SECTION 11. A new section of the Children's Code is
enacted to read:
"[NEW MATERIAL] INFORMATION SHARING PURSUANT TO NEW MEXICO NEXT GENERATION ACT.--Nothing in the Children's Code shall be deemed to prohibit the department from providing to the department of finance and administration any information necessary to assist in the determination or verification of the identity or number of beneficiaries that may be eligible for assistance pursuant to the New Mexico Next Generation Act."
SECTION 12. APPROPRIATIONS.--
A. Five hundred million dollars ($500,000,000) is appropriated from the general fund to the next generation trust fund for expenditure in fiscal year 2026 and subsequent fiscal years for the purposes of the next generation trust fund. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert to the general fund.
B. One hundred thousand dollars ($100,000) is appropriated from the general fund to the department of finance and administration for expenditure in fiscal year 2026 and subsequent fiscal years for administering the New Mexico Next Generation Act. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert to the general fund.
SECTION 13. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2025.