2023 New Mexico Statutes › Chapter 5 - Municipalities and Counties › Article 10 - Local Economic Development › Section 5-10-4 - Economic development projects; restrictions on public expenditures or pledges of credit.

A. No local or regional government shall provide public support for economic development projects as permitted pursuant to Article 9, Section 14 of the constitution of New Mexico except as provided in the Local Economic Development Act or as otherwise permitted by law.
B. The total amount of public money expended and the value of credit pledged in the fiscal year in which that money is expended by a local government for economic development projects pursuant to Article 9, Section 14 of the constitution of New Mexico and the Local Economic Development Act shall not exceed ten percent of the annual general fund expenditures of the local government in that fiscal year. The limits of this subsection shall not apply to:
(1) the value of any land or building contributed to any project pursuant to a project participation agreement;
(2) revenue generated through the imposition of an increment of the municipal gross receipts tax at a rate not to exceed one-fourth percent and dedicated to furthering or implementing economic development plans and projects as defined in the Local Economic Development Act or projects as defined in the Statewide Economic Development Finance Act [Chapter 6, Article 25 NMSA 1978]; provided that no more than the greater of fifty thousand dollars ($50,000) or ten percent of the revenue collected shall be used for promotion and administration of or professional services contracts related to the implementation of any such economic development plan adopted by the governing body;
(3) revenue generated through the imposition of an increment of the county gross receipts tax at a rate not to exceed one-eighth percent and dedicated to furthering or implementing economic development plans and projects as defined in the Local Economic Development Act or projects as defined in the Statewide Economic Development Finance Act; provided that no more than the greater of fifty thousand dollars ($50,000) or ten percent of the revenue collected shall be used for promotion and administration of or professional services contracts related to the implementation of any such economic development plan adopted by the governing body;
(4) the proceeds of a revenue bond issue to which municipal infrastructure gross receipts tax revenue is pledged;
(5) the proceeds of a revenue bond issue to which the revenue from an increment of the county gross receipts tax, imposed at a rate not to exceed one-eighth percent and dedicated by the ordinance imposing the increment to provide public support for projects, is pledged; or
(6) funds donated by private entities to be used for defraying the cost of a project.
C. A regional or local government that generates revenue for economic development projects to which the limits of Subsection B of this section do not apply shall create an economic development fund into which such revenues shall be deposited. The economic development fund and income from the economic development fund shall be deposited as provided by law. Money in the economic development fund may be expended only as provided in the Local Economic Development Act or the Statewide Economic Development Finance Act.
D. In order to expend money from an economic development fund for arts and cultural district purposes, cultural facilities or retail businesses, the governing body of a municipality or county that has imposed a municipal or county local option infrastructure gross receipts tax for furthering or implementing economic development plans and providing public support for projects as defined in the Local Economic Development Act or projects as defined in the Statewide Economic Development Finance Act by referendum of the majority of the voters voting on the question approving the ordinance imposing the municipal or county infrastructure gross receipts tax before July 1, 2013 shall be required to adopt a resolution. The resolution shall call for an election to approve arts and cultural districts as a qualifying purpose and cultural facilities or retail businesses as a qualifying entity before any revenue generated by the municipal or county local option gross receipts tax for furthering or implementing economic development plans and providing public support for projects as defined in the Local Economic Development Act or projects as defined in the Statewide Economic Development Finance Act can be expended from the economic development fund for arts and cultural district purposes, cultural facilities or retail businesses.
E. The governing body shall adopt a resolution calling for an election within seventy-five days of the date the ordinance is adopted on the question of approving arts and cultural districts as a qualifying purpose and cultural facilities or retail businesses as a qualifying entity eligible to utilize revenue generated by the Municipal Local Option Gross Receipts and Compensating Taxes Act [Chapter 7, Article 19D NMSA 1978] or the County Local Option Gross Receipts and Compensating Taxes Act [Chapter 7, Article 20E NMSA 1978] for furthering or implementing economic development plans and providing public support for projects as defined in the Local Economic Development Act or projects as defined in the Statewide Economic Development Finance Act.
F. The question shall be submitted to the voters of the municipality or county as a separate question at a regular local or county election or at a special election called for that purpose by the governing body. A special local election shall be called, conducted and canvassed as provided in the Local Election Act [Chapter 1, Article 22 NMSA 1978]. A special county election shall be called, conducted and canvassed in substantially the same manner as provided by law for general elections.
G. If a majority of the voters voting on the question approves the ordinance adding arts and cultural districts and cultural facilities or retail businesses as an approved use of the local option municipal or county economic development infrastructure gross receipts tax fund, the ordinance shall become effective on July 1 or January 1, whichever date occurs first after the expiration of three months from the date of the adopted ordinance. The ordinance shall include the effective date.
History:
Laws 1993, ch. 297, § 4; 1998, ch. 90, § 4; 2003, ch. 349, § 17; 2007, ch. 160, § 10; 2009, ch. 172, § 1; 2013, ch. 201, § 2; 2018, ch. 79, § 73; 2019, ch. 274, § 7; 2021, ch. 3, § 2.
ANNOTATIONS
The 2021 amendment,
effective July 1, 2021, added language related to providing public support for projects as defined in the Local Economic Development Act to conform to new definitions in the act, and made technical amendments; in Subsection B, Paragraph B(5), after "imposing the increment to", deleted "a project" and added "provide public support for projects"; in Subsection D, after each occurrence of "implementing economic development plans and", added "providing public support for"; and in Subsection E, after each occurrence of "Gross Receipts", added "and Compensating", and after "implementing economic development plans and", added "providing public support for".
The 2019 amendment,
effective July 1, 2019, authorizes the use of one-fourth percent of municipal gross receipts tax or one-eighth percent of county gross receipts as pledges for economic development project bonds; in Subsection B, Paragraph B(2), after "gross receipts tax", deleted "pursuant to the Municipal Local Option Gross Receipts Taxes Act for" and added "at a rate not to exceed one-fourth percent and dedicated to", in Paragraph B(3), after "gross receipts tax", deleted "pursuant to the County Local Option Gross Receipts Taxes Act for" and added "at a rate not to exceed one-eighth percent and dedicated to", and in Paragraph B(5), after "gross receipts tax,", deleted "revenue" and added "imposed at a rate not to exceed one-eighth percent and dedicated by the ordinance imposing the increment to a project".
Temporary provisions.
— Laws 2019, ch. 274, § 15 provided:
A. The repeal of and changes to certain taxes made in this act shall not impair outstanding bonds that are secured by a pledge of those taxes.
B. If a municipality or county has issued a revenue bond that is secured by a pledge of a tax being amended or repealed by this act, the revenue received by the municipality or county is impressed with the obligation to repay the outstanding bond and is dedicated to that repayment until the bond is fully discharged or otherwise provided for in full.
C. If a municipality or county has dedicated any amount of revenue attributable to a tax being amended or repealed by this act, the municipality or county shall continue to dedicate the same amount of revenue attributable to the tax until the ordinance dedicating the revenue expires, the term of the dedication expires, the governing body acts to change the dedication or, in the case of bonded indebtedness, the debt is fully discharged or otherwise provided for in full.
The 2018 amendment,
effective July 1, 2018, provided that elections called to approve arts and cultural districts as a qualifying purpose and cultural facilities or retail businesses as a qualifying entity for the purpose of expending funds from the economic development fund for arts and cultural district purposes shall be called, conducted and canvassed as provided in the Local Election Act, and made technical and conforming changes; and in Subsection F, deleted "municipal" and added "local" in two places, and after "as provided in the", deleted "Municipal Election Code" and added "Local Election Act".
Temporary provisions.
— Laws 2018, ch. 79, § 174 provided that references in law to the Municipal Election Code and to the School Election Law shall be deemed to be references to the Local Election Act.
The 2013 amendment,
effective July 1, 2013, removed the restriction on public support of economic development projects in rural areas involving retail sales; in Subsection D, after "cultural facilities", added "or retail businesses" and after "gross receipts tax before" deleted "June 30, 2007" and added "July 1, 2013" and in the second sentence, after "qualifying purpose and cultural facilities", added "or retail businesses" and after "cultural district purposes, cultural facilities", added phrase "or retail businesses"; in Subsection E, after "cultural facilities", added "or retail businesses"; and in Subsection G, after "cultural facilities", added "or retail businesses".
The 2009 amendment,
effective June 19, 2009, in Subsection B, after "shall not exceed", changed "five" to "ten".
The 2007 amendment,
effective July 1, 2007, added Subsections D through G.
The 2003 amendment,
effective June 20, 2003, inserted "or projects as defined in the Statewide Economic Development Finance Act" in Paragraphs B(2) and (3); and added "or the Statewide Economic Development Finance Act" to the end of Subsection C.
The 1998 amendment,
effective May 20, 1998, in Subsection B, added the last sentence at the end of the introductory language, designated Paragraph B(1), deleted "shall not be subject to the limits of this subsection" at the end of the paragraph, and added Paragraphs B(2) through (6); and added Subsection C.
The purchase of water rights is not included among the permissible uses of public money under the Local Economic Development Act.
— The anti-donation clause, N.M. Const., Art. IX, § 14, prohibits the state, a county, school district, or municipality from making any donation to or in aid of any person, association or public or private corporation, with certain exceptions; among the exceptions to the anti-donation clause's prohibition is N.M. Const., Art. IX, § 14(D), which allows a state, county, or municipality to create new job opportunities by providing "land, buildings or infrastructure" for facilities to support new or expanding businesses. The Local Economic Development Act, 5-10-1 to 5-10-17 NMSA 1978, was enacted to implement N.M. Const., Art. IX, § 14(D), and authorizes a local government to provide public support for economic development projects permitted by N.M. Const., Art. IX, § 14(D). As commonly understood and used by the legislature, however, "land, buildings or infrastructure" do not include water rights or the acquisition of water rights, and therefore, an agreement between the New Mexico economic development department and the village of Los Lunas, under which the state will provide funding for the acquisition of consumptive use water rights and the equivalency in water credits for a Facebook data center project in Los Lunas, New Mexico, would be in violation of the anti-donation clause and the Local Economic Development Act. The acquisition of water rights is not included among the permissible uses of public money under the Local Economic Development Act or the New Mexico constitution.
Purchase of Water Rights under the Local Economic Development Act
(11/13/18), Att'y Gen. Adv. Ltr. 2018-07.