HB 265

                                1  HOUSE BILL 265
                                2     57TH LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2026
                                3  INTRODUCED BY
                                4  Randall T. Pettigrew
                                5
                                6
                                7
                                8
                                9
                                10  AN ACT
                                11   RELATING TO PUBLIC FINANCE; CREATING THE TAXPAYER DIVIDEND
                                12   INCOME TAX REBATE FUND; PROVIDING FOR INCOME TAX REBATES;
                                13   CHANGING A DISTRIBUTION OF FEDERAL MINERAL LEASING FUNDS TO THE
                                14   EARLY CHILDHOOD EDUCATION AND CARE FUND TO THE TAXPAYER
                                15   DIVIDEND INCOME TAX REBATE FUND; AMENDING, REPEALING AND
                                16   ENACTING SECTIONS OF THE NMSA 1978; MAKING AN APPROPRIATION.
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                                18   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
                                19        SECTION 1.     Section 6-4-27 NMSA 1978 (being Laws 2020,
                                20   Chapter 3, Section 4, as amended) is amended to read:
                                21        "6-4-27.     EXCESS EXTRACTION TAXES SUSPENSE FUND--TRANSFER
                                22   OF EXCESS OIL AND GAS EMERGENCY SCHOOL TAX REVENUE--TAX
                                23   STABILIZATION RESERVE--[EARLY CHILDHOOD EDUCATION AND CARE]
                                24   TAXPAYER DIVIDEND INCOME TAX REBATE FUND [BEHAVIORAL HEALTH
                                25   TRUST FUND--SEVERANCE TAX PERMANENT FUND].--
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                                1  A.   The "excess extraction taxes suspense fund" is
                                2    created as a nonreverting fund in the state treasury.     Money in
                                3    the fund shall only be used to make transfers by the department
                                4    of finance and administration as required by this section.
                                5  B.   At the end of each fiscal year, the department
                                6    of finance and administration shall calculate and transfer the
                                7    balance of the fund attributable to that fiscal year as
                                8    follows:
                                9  (1)   [if in the current fiscal year the total
                                10   net receipts attributable to the tax imposed pursuant to
                                11   Section 7-31-4 NMSA 1978 and distributed pursuant to Section
                                12   7-1-6.20 NMSA 1978 exceed the annual average amount, the
                                13   department shall distribute the excess amount above the annual
                                14   average amount as follows:     (a)] to the tax stabilization
                                15   reserve, the amount necessary to bring the balance of state
                                16   reserves to a level equal to twenty-five percent of the
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                                17   aggregate recurring appropriations for that fiscal year from
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                                18   the general fund, as determined by the department; provided
                                19   that, if the balance in the excess extraction taxes suspense
                                20   fund is not sufficient to meet that level, the entire balance
                                21   shall be transferred to the tax stabilization reserve; and
                                22  [(b)   the balance of the excess amount
                                23   above the annual average amount, if any, after the transfer is
                                24   made pursuant to Subparagraph (a) of this paragraph shall be
                                25   transferred as follows:    1) for fiscal years 2026 through 2028,
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                                1    fifty percent to the early childhood education and care fund
                                2    and fifty percent to the behavioral health trust fund; provided
                                3    that if, as of the end of one of those fiscal years, the
                                4    balance of the early childhood education and care fund is less
                                5    than the balance of that fund as of the end of fiscal year
                                6    2025, the transfer to the behavioral health trust fund made
                                7    pursuant to this item shall be decreased by an amount equal to
                                8    one-half of the difference between the balance of the early
                                9    childhood education and care fund as of the end of fiscal year
                                10   2025 and the balance of that fund as of the end of that fiscal
                                11   year; and 2) for fiscal year 2029 and each fiscal year
                                12   thereafter, one hundred percent to the early childhood
                                13   education and care fund; and
                                14  (2)    the remaining balance of the fund, if any,
                                15   shall be distributed to the severance tax permanent fund] (2)
                                16   to the taxpayer dividend income tax rebate fund, the balance
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                                17   remaining in the excess extraction taxes suspense fund, if any,
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                                18   after the transfer is made pursuant to Paragraph (1) of this
                                19   subsection.
                                20  C.   As used in this section,
                                21  [(1)   "annual average amount" means the total
                                22   net receipts attributable to the tax imposed pursuant to
                                23   Section 7-31-4 NMSA 1978 and distributed pursuant to Section
                                24   7-1-6.20 NMSA 1978 in the immediately preceding five fiscal
                                25   years, divided by five; and
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                                1  (2)] "state reserves" means the general fund
                                2    balances, as determined by the department of finance and
                                3    administration, including all authorized revenues and transfers
                                4    to the general fund and balances in the appropriation
                                5    contingency fund, the general fund operating reserve, the
                                6    state-support reserve fund and the tax stabilization reserve."
                                7  SECTION 2.    A new section of the Income Tax Act is enacted
                                8    to read:
                                9  "[NEW MATERIAL] TAXPAYER DIVIDEND INCOME TAX REBATE FUND--
                                10   CREATED--INCOME TAX REBATES.--
                                11  A.   The "taxpayer dividend income tax rebate fund"
                                12   is created as a nonreverting fund in the state treasury.     The
                                13   fund shall consist of distributions, appropriations, gifts,
                                14   grants and donations.    The fund shall be administered by the
                                15   department, and money in the fund is appropriated to the
                                16   department to provide income tax rebates as provided by this
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                                17   section.    Disbursements from the fund shall be made by warrant
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                                18   of the secretary of finance and administration pursuant to
                                19   vouchers signed by the secretary of taxation and revenue or the
                                20   secretary's designee.
                                21  B.   A resident who files a New Mexico income tax
                                22   return and who is not a dependent of another individual shall
                                23   be eligible for a tax rebate pursuant to this section.     The
                                24   resident shall receive a rebate in an amount equal to the
                                25   amount of money in the taxpayer dividend income tax rebate fund
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                                1    at the end of the previous calendar year divided by the total
                                2    number of residents who filed an income tax return for that
                                3    year.     A rebate shall not be allowed for a return filed after
                                4    May 31.    Rebates shall be provided by the department as soon as
                                5    practicable.
                                6  C.     The rebates provided by this section may be
                                7    deducted from the taxpayer's New Mexico income tax liability.
                                8    If the amount of rebate exceeds the taxpayer's income tax
                                9    liability, the excess shall be refunded to the taxpayer.
                                10  D.     The department may require a taxpayer to claim a
                                11   rebate provided by this section on forms and in a manner
                                12   required by the department.
                                13  E.     An annual report shall be submitted no later
                                14   than October 1 each year to the legislative finance committee,
                                15   the revenue stabilization and tax policy committee and any
                                16   other appropriate interim committees on the cost of the rebates
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                                17   provided pursuant to this section and any other information
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                                18   necessary to evaluate the rebates."
                                19  SECTION 3.    Section 22-8-34 NMSA 1978 (being Laws 1967,
                                20   Chapter 16, Section 90, as amended) is amended to read:
                                21  "22-8-34.    FEDERAL MINERAL LEASING FUNDS.--
                                22  A.     Money received by the state pursuant to the
                                23   provisions of the federal Mineral Leasing Act shall be
                                24   distributed to the public school fund, except as follows:
                                25  (1)   an annual appropriation to the
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                                1    instructional material fund;
                                2  (2)   an annual appropriation to the board of
                                3    regents of the New Mexico institute of mining and technology
                                4    for the bureau of geology and mineral resources;
                                5  (3)   the distribution made pursuant to
                                6    Subsection B of this section; and
                                7  (4)   the distribution made [pursuant to Section
                                8    3 of this 2020 act] pursuant to Subsection C of this section.
                                9  B.   Money received by the state as its share of a
                                10   prepayment of royalties pursuant to 30 U.S.C. 1726(b), as that
                                11   section may be amended or renumbered, shall be distributed as
                                12   follows:
                                13  (1)   a portion of the receipts, estimated by
                                14   the taxation and revenue department to be equal to the amount
                                15   that the state would have received as its share of royalties in
                                16   the same fiscal year if the prepayment had not been made, shall
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                                17   be distributed to the public school fund; and
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                                18  (2)   the remainder shall be distributed to the
                                19   common school permanent fund.
                                20  C.   If, by June 30 of each fiscal year, the net
                                21   receipts for that fiscal year of the money received by the
                                22   state pursuant to the federal Mineral Leasing Act exceed the
                                23   annual average amount, the excess shall be distributed to the
                                24   taxpayer dividend income tax rebate fund.    If there is an
                                25   excess amount, the distribution shall be made as soon as
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                                1    practicable.   If there is not an excess amount, no distribution
                                2    shall be made to the fund.   The department of finance and
                                3    administration shall make the calculation to determine if an
                                4    excess amount shall be distributed.    As used in this
                                5    subsection, "annual average amount" means the total net
                                6    receipts attributable to money received by the state pursuant
                                7    to the federal Mineral Leasing Act in the immediately preceding
                                8    five fiscal years, divided by five."
                                9  SECTION 4.   REPEAL.--Section 9-29A-3 NMSA 1978 (being Laws
                                10   2020, Chapter 3, Section 3, as amended) is repealed.
                                11        SECTION 5.   APPLICABILITY.--The provisions of Section 2 of
                                12   this act apply to taxable years beginning on or after January
                                13   1, 2026.
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