State treasurer opposes baby bonds bill passed in committee, backs alternative bill
Feb. 14—Most Democratic legislators and advocates seem to agree on the concept of baby bonds, or creating publicly funded trust accounts for New Mexico's babies. But how exactly the state should roll out such a program is a little more fuzzy.
House Bill 7, the Children's Future Act and Fund, passed the House Health and Human Services Committee on Friday on a 5-4 party-line vote, much to the dismay of state Treasurer Laura Montoya.
"I want to be clear: I have nothing to do with the writing of that bill. I do not support that bill," Montoya told the Journal later on Friday. "I do support baby bonds."
The legislation, with a $5 million ask, would create trust funds for babies born in New Mexico on or after Jan. 1, if they graduate from a New Mexico high school. The money could be used for education, housing, retirement, entrepreneurship or investment opportunities.
Partnership for Community Action helped craft the bill, and Deputy Director Teresa Madrid told the Journal her organization will continue to work with the Treasurer's Office for a "policy that allows us to bring baby bonds to fruition as a way to invest in children."
"Baby bonds are a good investment today to support families in breaking cycles of generational poverty, to close the wealth gap in our communities and to really, truly invest in our communities in ways that they can utilize for financial stability in the future," Madrid said.
Montoya before the session was in talks with the sponsors of HB7 — Reps. Linda Serrato, D-Santa Fe, and House Speaker Javier Martínez, D-Albuquerque — about supporting the effort. But she said the bill changed significantly since then.
But the treasurer still supports baby bonds, and that's why she's instead backing a bill introduced later on Friday in the Senate, Senate Bill 397, sponsored by Sens. Moe Maestas, D-Albuquerque, and Leo Jaramillo, D-Española.
HB7 has fundamental problems, Montoya said, like its $5 million appropriation request, which the treasurer said is too small to provide for all the children born in New Mexico. The Senate bill asks for a $500 million appropriation instead.
Under that appropriation, which would maintain the fund for decades, beneficiaries could pull out $20,000 to $25,000 by the time they reach 18, Montoya said, and if they save the money until they're 35, they would get about $75,000. The bill applies to any baby born after July 1.
Montoya also found issues with the investment style in HB7, which pins the responsibility on the Treasurer's Office as well as the State Investment Council, and sends portions of the money to the Treasurer's Office rather than keeping it in its investment pool.
"You'll see a very big difference between the two bills. Ours has been a very thoughtful bill that talks to professionals about how to get it done," Montoya said.
However, the Senate bill backed by the treasurer would also need to be approved by the House of Representatives in order to advance to Gov. Michelle Lujan Grisham's desk for final consideration.
In the House Health and Human Services Committee on Friday, GOP Whip Alan Martinez of Bernalillo mentioned the Treasurer's Office opposition to the bill in his line of questioning.
"We felt that this was a pragmatic approach that allowed for building the foundation within the realm of the Legislature overseeing that process that gave transparency to it," Serrato responded. "This doesn't create a $600 million fund right now that's going to start investing in kids tomorrow. ... We wanted to give it that opportunity to grow publicly."
The GOP Whip also questioned why the Legislature should codify baby bonds instead of directly investing in areas like housing or education.
"Baby bonds do not at all replace direct pay and giving money now; they complement it by ensuring that children from all backgrounds don't just survive childhood, but they have a financial foundation to thrive as adults," said Nichelle Gilbert, executive director of Partnership for Community Action, in response.
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