Baby's first bond? Competing bills would set aside money for New Mexico-born children

Yahoo

27-02-2025

Alexandra Alarcon, a Silver City single mother of three, lives day to day.
Juggling her daughters' schooling, sports and her own work, the 33-year-old said saving for her children's futures is a challenge.
But a $6,000 baby bond her youngest daughter, Adryan Raye, received last year as part of a statewide pilot program was like a weight lifted off Alarcon's shoulders.
'It's such a relief,' she said of the bond, which is expected to grow as her daughter ages so she can use it when she's older. '… It's going to be such a proud moment to know that she's going to be 100% stable enough to do what she wants when she becomes of age.'
That pilot program, launched by a coalition of community organizations across New Mexico, has been touted as a way to test the waters for Senate Bill 397 and House Bill 7, two bills making their way through the Roundhouse aimed at establishing similar programs for children statewide.
Though both bills would create mechanisms to invest in the futures of New Mexico children far down the line, they each have distinct approaches to making those investments — including broad differences in how much startup money they would initially set aside and which children would qualify for the investments.
Teresa Madrid, deputy director of Partnership for Community Action, which helped establish the pilot program, said baby bonds provide an 'opportunity for hope for New Mexico's children and families.'
'We really believe that baby bonds is one of the solutions to bring families out of cycles of poverty, that it is a solution to build generational wealth for children in New Mexico,' she said.
The bills could reach tens of thousands of children. That said, births in New Mexico have steadily declined for over 10 years, according to a recent Legislative Finance Committee presentation. In 2023, just over 21,000 babies were born in the state, down from nearly 27,800 in 2010.
SB 397, sponsored by Sens. Leo Jaramillo, D-Española, and Moe Maestas, D-Albuquerque, would establish two funds: the Next Generation Trust Fund and the Baby Bonds Fund.
Under the bill, the former would receive a $500 million seed investment to provide children born in New Mexico on or after July 1, 2025, with $7,000 baby bonds. The money would be invested and grow until they become adults, and in 2043, a portion of the trust fund partly based on the number of children turning 18 that year would be shifted to the Baby Bonds Fund for distribution.
State Treasurer Laura Montoya said in an interview that by the time those children turn 18, the baby bonds are expected to grow to between $20,000 and $25,000. By the time they're 35, that number could shoot up close to $75,000.
'We will be building up our own economy and investing in our own people and families,' Montoya said of the bill.
It's not clear if the proposed $500 million appropriation will actually make it through the Roundhouse.
SB 397, though, faces some rivalry in HB 7, a measure sponsored by three House Democrats, including House Speaker Javier Martínez, that would create the 'Children's Future Fund' with a $5 million appropriation in seed money.
That bill would apply to children born in New Mexico this year, who, upon graduating from a New Mexico high school, could use money from the fund to pay for their education, housing and other costs. Under the bill, a task force would further analyze how to refine the program.
One of the bill's sponsors, Rep. Linda Serrato, D-Santa Fe, said that while New Mexico has done much to help low-income families in their day to day lives, the Children's Future Fund 'really acknowledges the fact that we have a poor state.'
'This is helping them envision their future and investing in that future,' she said.
Montoya, however, has publicly expressed concerns with HB 7, including the eligibility requirements the measure lays out for children.
She argued HB 7 would cut out young people who opt for a different path than finishing high school who should still benefit from baby bonds (SB 397 still has an education component, but instead requires young people to take a state-approved financial literacy course before claiming their bonds).
Montoya also argued against a requirement in HB 7 that children must have continuously lived in New Mexico, saying that mandate would exclude many people, including those whose families may have left the state for a period of time because of service in the military or a medical field.
Under SB 397, any child whose parents had lived in New Mexico for at least five years prior to their birth, or those placed in the custody of the state Children, Youth and Families Department, would be eligible for a baby bond.
Serrato, however, said the current eligibility parameters for HB 7 ensure children who spent their formative years in New Mexico are benefiting from the fund.
The bills each face concerns they would violate the anti-donation clause in the state constitution. In separate analyses of each bill, Legislative Finance Committee staff wrote that distributing money to individual beneficiaries 'could be an unconstitutional donation of public resources.'
Montoya and Serrato each acknowledged the concerns, saying the task force — or changes to the constitution — could help determine how baby bonds fit in with the clause.
'We're trying to be respectful of where we're at today in the rules, but we also want to be thoughtful about what tomorrow might look like,' Montoya said.