New Mexico Constitution Article IX - State, County and Municipal Indebtedness
New Mexico Constitution – Article IX: State, County and Municipal Indebtedness
Article IX of the New Mexico Constitution outlines the rules and limitations on borrowing and debt by the state, counties, cities, towns, villages, and other local government entities. Its primary purpose is to prevent excessive debt and ensure fiscal responsibility.
🔹 Key Sections and Their Summaries:
Section 1 – State Debt Limit
The state may not contract debts exceeding $200,000, except:
To repel invasion
Suppress insurrection
Defend the state in war
Any other state debt must be approved by voters via a statewide election.
Section 2 – Local Government Debt Limit
Counties, cities, towns, and villages may incur debt up to 4% of the assessed value of taxable property.
Additional debt (up to 8%) is allowed for:
Water supply systems
Sewer systems
Electric or gas utilities
Public infrastructure
With approval of voters
Section 3 – Election Requirement
No local government (county, city, town, village) may borrow money or issue bonds without a majority vote of qualified electors.
Section 4 – Public Utility and Infrastructure Debt
Allows higher debt limits for constructing or improving utilities (water, electric, gas, sewer).
Requires voter approval.
Section 5 – School District Debt
School districts may also incur debt up to 6% of assessed property value.
Additional borrowing requires voter approval.
Section 6 – Debt Repayment
All debt (state or local) must have a dedicated tax or revenue stream for repayment.
Debt must be repaid within 50 years.
Section 7 – Refunding Bonds
Governments may issue refunding bonds (to refinance existing debt) without voter approval, if:
The total debt is not increased
The repayment terms are favorable
Section 8 – Industrial Revenue Bonds (IRBs)
Local governments may issue IRBs to finance:
Industrial or commercial projects
These are not considered public debt, and do not require voter approval, because repayment comes from project revenues—not taxes.
Section 9 – State Guarantees Prohibited
The state may not guarantee local government debt, nor can it assume the debt of any county or municipality.
Section 10 – Short-Term Debt
Local governments may borrow short-term (e.g., for cash flow), but such debt must be repaid within one fiscal year.
✅ Core Principles of Article IX:
Debt limits ensure fiscal restraint.
Voter approval is required for major borrowing.
Infrastructure and utilities get special provisions to allow for investment.
Public debt must be repaid in a timely and secure manner.
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