Legislators are looking to build “future money” with investment funds – Santa Fe New Mexican

“I think of this job almost every moment I am awake,” said Clark, who stepped into the post a little over a year ago.

“I have no children,” Clark added. “But I have so many friends who have children. It is incredibly important to me that we do the best we can with the role that we have to create a bright future for tomorrow.”

Common assets managed by the State Investment Council continue to grow.

In August, they were $ 57.8 billion, more than doubling what they were five years ago.

While the Council creation dates back to 1958, when it was designed to manage the Standing Grant Fund, its responsibilities were ballooning against the background of the creation of additional investment funds as part of the strategy to turn what legislators call “Now Money” in the Future Money as Bonanza in Petrol Income is beginning to decrease.

The strategy is one of the legislators who hope to repeat during this year’s 60-day session.

The number of funds currently managed by the State Investment Council has increased to 12, compared to five in 2019.

Legislators this year offer a set of new investment funds for the Council to manage, which are also intended to rotate the revenue in the future, while the state is still in cash.

The most profile, Bill 1 of the Senate 1, proposed a fund for behavioral health, accepted the Chamber on Friday. Originally proposed at $ 1 billion, the amount of money that would enter the fund was deprived of the bill by the Senate Financing Committee and will be resolved later.

The leader of the Senate majority Peter Wirt, Democrat from Santa Fe, said the legislature has invested “huge amounts of money that is not repeated” instead of spending everything on new programs that will require ongoing funding.

“When we make a total return, say 5% of a billion dollars, we generally take” now money “and make” future money, “he said.

“This direction, which was indeed led by John Arthur Smith, when he created the Early Childhood Fund, allowed us to navigate over time here in New Mexico with these massive budget surpluses to plan the future,” Wirt Referring to the late democratic senator, who was a longtime chairman of the Senate Financing Committee.

Investments also allowed the state to “make sure that we not only spend every dollar on new programs that would lead to all those trains we’ve been for so many years,” he added. “I think we are allowed to restore stability in our budget in a way that certainly, at the time when I was here, I have not seen, so it is very positive.”

Michael Coleman, chief spokesman for governor Michel Lujan Grisham – who chaired the State Investment Council – the mood echoed.

“The Strategic Management of New Mexico Permanent Funds of $ 61 billion is the provision of our country’s economic future,” he said in a statement.

“With proper management and supervision, our investments in permanent funds are expected to exceed the revenue from oil and gas by 2039 – the transformation of today’s wealth of natural resources into a lasting prosperity for generations of new Mexicans,” Coleman said. “These funds now generate more than $ 2 billion a year for education and critical services and help to build a stronger basis for the future of our country.”

Coleman said Lujan Grisham’s administration is watching SB 1 and other bills that are part of a more large behavioral health package.

Coleman noted support for the proposed amendment of the Constitution to create the Early Childhood Trust Fund as a permanent trust fund. The sponsor, Senator Michael Padila, D-Albuquerque, sponsors a companion bill who, among other things, would double the annual distribution from the fund to $ 500 million.

“By conquering the Early Childhood Trust Fund in our Constitution, we promise the iron of the youngest children and their families in New Mexico,” said Coleman, adding that the proposed annual investment of $ 500 million would provide universal and high quality Early childhood early childhood childhood in early childhood for generations of new Mexicans.

Other accounts introduced during the new funds session include:

• The Senate Bill 88 will set up a Medicaid trust fund. It will be overshadowed with a total budget fund for a fund of $ 300 million.
• The Senate Bill 234 will set up a new tribal education fund with an initial investment of $ 100 million from the common fund.
• The House 25 bill will create a new grant infrastructure fund. He is looking for an initial investment for a $ 20 million common fund.
• The Senate Bill 358 will set up a horses’ trust in an initial investment of $ 20 million.
• The House Bill 113 will set up an animal welfare fund, starting with the total funds for a $ 10 million fund.

Investment funds in New Mexico have allowed the state government to pay for a level of service that does not burden taxpayers as a result of the oil and gas award.

For example, the Education and Care Department offered a $ 995 million budget for a fiscal year of 2026. This is largely due to the investment income of more than $ 9 billion for education and early childhood education that was created In 2020, to provide recurrent revenue to support the early childhood education and care services.

“Without these distributions from us back in the country, taxes will have to increase every new Mexican if we want to have this level of service, so we both save taxpayers’ money and can provide higher levels of service,” ” Clark said, adding that investment income is expected to increase significantly over time.

“We estimate that by 2050, our distributions in the state will be one -third of all revenue from common funds, and it obscures all corporate and income taxes far away, and is essentially just like all sales taxes,” he said. “It is incredible that one -third of the whole source of state revenue can come from our investment returns and distributions back in the country.”

Investment funds have a place to improve.

A report on the fulfillment of the Committee on Legislative Finance, whose obligations include the provision of objective fiscal and public analyzes of the legislature policy, found that the permanent benefit of compensation tax worth $ 10 billion was one of the lowest achievements in the country, or Permanent donation funds in the country in the country.

“The implementation of STPF is important as it is the main fund that the state hits to overcome future declining oil and gas revenue,” the October 2024 report said.

In the last quarter, the Fund registered a one -year return of 6.87%, while the return on the permanent grant fund of $ 32 million was 8.47% over the same period.

“This continues a multi -year trend in which Stpf’s return has been below LGPF for the last five fiscal years,” the report said. “This difference in the results is thought to be $ 160 million over the next 10 years and has increased in the future, with billions in lost balances.”

Clark said the low return is attributed to a combination of factors, including a shortage of the State Investment Council, which is a constant concern for Clark against the backdrop of efforts in the legislature for creating other funds that his agency will manage.

“The other is that there is a part of this fund that has been canceled for lower return programs under the Statute,” including the Private Capital Investment Program in New Mexico and a Lettle Business Recovery Program created in response to the pandemic Covid-19.

Changes to the Private Capital Investment Program have been implemented to improve return, Clark said.

“But many of these changes have just happened in the last two years and have not yet been shown by the return on investment, but they will be in the coming years,” he said.

Like Coleman, Clark noted that investment funds are already redirecting more than $ 2 billion back to the state government for their annual expenses.

“This year, our distributions in the country fund 27% of the entire education of the K-Trough-12 in the country,” he said. “This is huge and this number will grow over time, but the fact that we are already paying for more than a quarter of the K-Trough-12 education is incredible.”

Investment income pays for 58% of all early childhood education programs, he added.

“With the budget as it is currently standing [for the upcoming fiscal year]This number should be increased significantly, “Clark said.

Clark said New Mexico is among the dozen countries that have such funds.

“When we were given statehood and gave lands from the federal government – about a third of New Mexico’s land mass is the property of the state – many of these countries have created state funds for wealth,” he said.

But what really helped New Mexico is a combination of two factors, Clark said.

“One is that we have become the second largest country producing oil in the country thanks to the Perm pool,” he said.

The second is the Senate Bill 26, which transfers excess oil and gas revenue to the permanent benefit tax fund.

“This one was single changed the future of New Mexico,” he said. “Without this bill, we could not compensate for the decline in oil and gas. … This account is what allows us to completely compensate for the losses of oil and gas over time.”

Clark said he could not emphasize how “changing the life” legislation is for New Mexico.

“Legislative economists estimate that in the next five years, the Senate 26 bill will remove an additional 55% of the instability of the State General Fund,” he said. “So, we will move from one of the top five countries for the country’s income in order to have one of the lowest rates of income instability and the great thing is that it allows long-term strategic planning.”

Clark said the idea of ​​turning “now money” into “future money” is not a distant idea.

“This will help five years now, in 10 years,” he said. “This will help the current generation as well as to the next generations.”