SB 26 — EXCESS OIL & GAS FUNDS TO SEVERANCE TAX FUND

SENATEAN BILLACT 26RELATING 56THTO LEGISLATUREFINANCE; - STATEOFNEWMEXICO- FIRST SESSION, 2023 INTRODUCED BY Roberto "Bobby" J.

GonzalesPROVIDING ThisFOR documentTHE mayDISTRIBUTION incorporateOF amendmentsCERTAIN proposedEXCESS byOIL aAND committee,GAS butTAX notREVENUES yetAND adopted,FEDERAL asMINERAL wellLEASING asACT amendmentsPAYMENTS thatTO haveTHE beenSEVERANCE adoptedTAX duringPERMANENT theFUND. current legislative session.

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hSECTION AN1. ACT g o RELATING TO FINANCE;

PROVIDINGSection FOR6-4-27 THENMSA DISTRIBUTION1978 OF(being CERTAINLaws t2020, hrChapter g3, eSection i4) kis EXCESSamended OILto ANDread: GAS TAX REVENUES AND FEDERAL MINERAL LEASING ACT h r i s PAYMENTS TO THE SEVERANCE TAX PERMANENT FUND.

h"6-4-27. , t, e u g e b l e e h BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

nEXCESS dEXTRACTION dTAXES iSUSPENSE =FUND-- =TRANSFER oOF hEXCESS SECTIONOIL 1.AND GAS EMERGENCY SCHOOL TAX REVENUE-- TAX STABILIZATION RESERVE--EARLY CHILDHOOD EDUCATION AND CARE FUND--SEVERANCE TAX PERMANENT FUND.-- A.

Section 6-4-27 NMSA 1978 (being Laws 2020, l ] b ,d i a º e Chapter 3, Section 4) is amended to read:

r i = r t e w d m a n o "6-4-27.

EXCESS EXTRACTION TAXES SUSPENSE FUND--TRANSFER d m :

b e d s º o t n = .223783.1AIC March 10, 2023 (8:48am) s k m e e a n e d r e l u [ A d OF EXCESS OIL AND GAS EMERGENCY SCHOOL TAX REVENUE--TAX STABILIZATION RESERVE--EARLY CHILDHOOD EDUCATION AND CARE FUND--SEVERANCE TAX PERMANENT FUND .-- A.

(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 SB 26 Page 1 department shall distribute the excess amount SFCºaboveabove the h annual average amount»SFCamount as follows:

u » r (a) to the tax stabilization reserve, t h g e l i the amount necessary to bring the balance of state reserves to h r i s a level equal to twenty-five percent of the aggregate recurring h , e h appropriations for that fiscal year from the general fund, as t u g e b l e e , gh determined by the department;

provided that, if the balance in n d d i = = o h the excess extraction taxes suspense fund is not sufficient to l ] b ,d i a º r meet that level, the entire balance shall be transferred to the e r = t e w d m a n o tax stabilization reserve;

and d(b) mto :the early childhood education and care 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;

b r e t º o t n = .223783.1AIC March 10, 2023 (8:48am) s k m e - 2 - e a n e d r e l u [ A d [(2)] (b) to the early childhood education and care fund, the balance [remaining in the excess extraction taxes suspense fund] of the excess amount SFCºabove the annual average amount»SFC , if any, after the transfer is made pursuant to [Paragraph (1) of this subsection] Subparagraph (a) of this paragraph;

and (2) "state reserves" means the general fund balances, as determined by the department of finance and hSB 26 Page 2 administration, including all authorized revenues and transfers u » r to the general fund and balances in SFCºthe [the appropriation t h g e l i contingency fund]»SFCfund, SFCºthe appropriation contingency h r i s fund»SFC SFCº,»SFC the general fund operating reservereserve, hthe , e h SFCº,»SFC SFCº[the state-support reserve fund]»SFCfund SFCºthe t u g e b l e e , gh state-support reserve fund»SFC and the tax stabilization nreserve." d d i = = o h reserve [and the tobacco settlement permanent fund]." l ] b ,d i a º r SECTION 2.

Section 7-1-6.61 NMSA 1978 (being Laws 2017 e r = t e w d m a n o (1st S.S.), Chapter 3, Section 3, as amended) is amended to dread: m :

b r e t º o t n = .223783.1AIC March 10, 2023 (8:48am) s k m e - 3 - e a n e d r e l u [ A d read:

A distribution pursuant to Section 7-1-6.20 NMSA 1978 shall be made to the excess extraction taxes suspense fund in an amount as calculated pursuant to Subsection B of this section.

If the year-to-date amount plus the current net receipts exceeds the [annual average ] threshold amount, the excess shall be distributed by the taxation and revenue department to the excess extraction taxes suspense fund.

h (1) ["annual average amount" means the total g o t hr net receipts attributable to the tax imposed pursuant to g e i k Section 7-31-4 NMSA 1978 and distributed pursuant to Section h r i s 7-1-6.20 NMSA 1978 in the immediately preceding five fiscal h , t, years, divided by five] "threshold amount" means the total net e u g e b l e e h receipts attributable to the tax imposed pursuant to Section nSB d26 dPage i3 = = o h 7-31-4 NMSA 1978 and distributed to the general fund in fiscal l ] b ,d i a º e year 2024;

and r(2) i"year-to-date =amount" rmeans tthe ecumulative wyear-to-date dnet mreceipts aattributable nto othe (2)tax "year-to-dateimposed amount"pursuant meansto Section 7-31-4 NMSA 1978 and distributed to the cumulativegeneral dfund min :the prior months of the current fiscal year." SECTION 3.

b e d s º o t n = .223783.1AIC March 10, 2023 (8:48am) s k m e - 4 - e a n e d r e l u [ A d year-to-date net receipts attributable to the tax imposed pursuant to Section 7-31-4 NMSA 1978 and distributed to the general fund in the prior months of the current fiscal year." SECTION 3.

DISTRIBUTION--EARLY CHILDHOOD EDUCATION AND CARE FUND--SEVERANCE TAX PERMANENT FUNDFUND--PAYMENTS --PAYMENTS PURSUANT TO FEDERAL MINERAL LEASING ACT.-- A.

[If,If, by June 30, 2022 and ] HTRCºBy»HTRC HTRCºIf, by»HTRC June 30 of each fiscal yearyear, [thereafter], 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 SFCº amount above the annual average amount»SFCamount shall be distributed to the early childhood education and care fund and attributed to that fiscal year.

[IfB. there is an excess amount, the distribution shall be made h as soon as practicable.

IfIf, thereby isJune not30, an2025, excessand amount,by noJune g30 oof teach hrfiscal 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 madedistributed to the severance tax permanent fund.

TheSB department26 ofPage g4 eC. i k finance and administration shall make the calculation to h r i s determine if an excess amount shall be distributed.] h , t, e u g B.

If, by June 30, 2025, and by June 30 of each e b l e e h fiscal year thereafter, the remaining amount of the net n d d i = = o h receipts for that fiscal year of the money received by the l ] b ,d i a º e state pursuant to the federal Mineral Leasing Act after the r i = r t e w d m a n o distribution pursuant to Subsection A of this section exceeds d m :

b e d s º o t n = .223783.1AIC March 10, 2023 (8:48am) s k m e - 5 - e a n e d r e l u [ A d the threshold amount, the excess shall be distributed to the severance tax permanent fund.

C.

[B.] D.

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 h Subsection B of Section 22-8-34 NMSA 1978." u » r SECTION 4.

EFFECTIVE DATE.--The effective date of the t h g e l i provisions of this act is July 1, 2024.

hSB r26 iPage s5 -25 6 - h , e h t u g e b l e e , gh n d d i = = o h l ] b ,d i a º r e r = t e w d m a n o d m :

b r e t º o t n = .223783.1AIC March 10, 2023 (8:48am) s k m e e a n e d r e l u [ A d