Senate finance panel hears two-year aid package to offset local losses from House Bill 9

Senate Finance Committee members heard an emergency-style substitute for Senate Bill 273 proposing a two-year, monthly appropriation to hold local governments harmless from revenue losses tied to the termination or reduction of contracts with private detention facilities under recent state policy changes.

The substitute—presented by the bill sponsor—would appropriate $42,400,000 from the general fund across fiscal years 2027 and 2028 for a package of targeted payments and program support. The sponsor said funds would protect Otero County bond obligations, fund critical water repairs in Estancia, support prisoner transport in Cibola County, and stabilize municipal budgets in Milan and Grants. "This is not a bailout. This is not a permanent funding source. This is a two-year bridge to protect public safety, bondholders, infrastructure, and local taxpayers while implementing the state policy," the sponsor said.

Committee members asked detailed questions about eligibility, timing and verification. Senator Trudeau asked whether the bill’s use of the term "expended" included encumbered funds; the sponsor clarified that "expended" means an actual payment, not just an encumbrance. The substitute also includes a 90-day notice requirement that local governments must provide if a facility signs a replacement federal contract so that state payments can be terminated; the sponsor described the provision as a clawback safeguard.

Local government representatives testified in support. Catherine Carroll of New Mexico Counties said the association "stands in strong support of this bill" and urged the committee to recognize the significant fiscal impact of House Bill 9 on affected counties. Larry Sontag said communities harmed by the change in federal contracting "deserve compensation based on the actions that were previously taken."

Members probed how appropriation amounts were calculated. The sponsor said figures were negotiated with local officials and the executive branch and that the Department of Finance and Administration (DFA) would handle transactions, receipts and reimbursement verification. Senators expressed concern about late additions to the bill described as the executive's "grow" requests; the sponsor said some requests arrived too late for separate bills and were therefore incorporated into the substitute.

The committee did not vote on final passage. After extended questioning and offers to submit amendments, the committee agreed to roll the bill over until the afternoon for further review and amendment work.

The sponsor said DFA would be the channel for distributions and verification, and that any improperly received payments must be repaid. The bill remains under committee consideration and is expected to return with amendments.