Nov. 28 – New Mexico’s anti-donation law is rooted in an issue that predates statehood and dates back to when the Land of Enchantment was a territory.
At the time, concerns were high about the potential for the government to fund the economic interests of the fast-growing and dominant railroad industry, state Rep. Kathleen Cates, a Democrat from Rio Rancho, told fellow lawmakers earlier this month.
It was common, she noted, for states in the western U.S. to have such a law on the books, “to make sure our government and our taxes didn’t go to the railroads.”
The provision, known as the Anti-Donation Clause in the New Mexico Constitution, bars state and local government agencies, including the Legislature, from making donations to nonprofits and other private organizations and individuals as a precaution against corruption. While the more than century-old provision still serves a crucial purpose, Cates and other lawmakers believe it needs to be revised.
“It was a very good idea at the time. But over the years and due to complexity, states have all adapted their anti-donation clauses. We are the only ones who have stuck with our outdated amendment to our Constitution,” Cates said.
She and retiring Sen. Jerry Ortiz y Pino, D-Albuquerque, introduced a proposal to amend the article of the Constitution, which contains the anti-donation clause, to the Legislature’s Courts, Corrections and Judiciary Committee on Nov. 13.
Cates and Ortiz y Pino argued that the existing provision prevents or complicates a number of initiatives that the legislature may wish to undertake, especially in the area of the capital expenditure process.
“It limits how public funds can be used to help people in this state,” Ortiz y Pino said. “The whole point of this is to make it easier for New Mexico to help the people in the state who have needs.”
In the past, the anti-donation clause has hampered a number of state and local government initiatives, even causing the city of Santa Fe to stop funding the popular Hometown Heroes banner program, which honors local military veterans, over concerns that using the money in battle would be state law.
Under the proposed expansion of the law, the state government could “use public resources for a public purpose” and “invest in public and private partnerships,” meaning it could make donations or fund nonprofits for specific projects and initiatives that meet the required requirements. criteria.
The proposed amendment would not be the first change in the law. There have been several amendments and exceptions to the anti-donation clause over the years, and since 1912 there have been about 30 judicial opinions applying the clause, according to a 2022 New Mexico Finance Authority Oversight Committee report.
A bill that would be accompanied by a resolution proposing a constitutional amendment — which would require voter approval — outlines the guardrails for the changes.
“The enabling legislation sets out a procedure by which nonprofits could register,” Ortiz y Pino said in an interview. “Their proposals would be vetted by a committee, and then the committee would make recommendations to the Legislature on what they should be funded for.”
Currently, the state can have service contracts with nonprofits and private companies, Ortiz y Pino said, but under the proposed changes the state or a local government could send money directly to private entities for projects that serve a public purpose — for example: to build vehicles to purchase or to repair a leaking homeless shelter roof. This would reduce administrative burden at the local level, he said.
To get around the anti-donation clause, local governments must now act as tax agents for nonprofits.
Lawmakers on the Courts, Corrections and Justice Committee emphasized the importance of strong provisions designed to guard against corruption if the legislature is to meaningfully change the anti-donation clause.
“I’ve been struggling with this bill because I think I probably have the most nonprofits of any legislative district in the state here in Santa Fe,” said Senate Majority Leader Peter Wirth, a Democrat from Santa Fe. “…Every nonprofit is set up and they think they can do this best. If I have 400 people standing in front of my office, how can I possibly determine what makes sense and how to distribute it?”
Wirth said, “The guardrails are super important,” adding that he is “very open” to the proposal and will “carefully look at the enabling statute.”
The constitutional amendment would require a statewide vote. Unless a special election is called, the next opportunity will be the November 2026 general election.
At the Nov. 13 meeting, Ortiz y Pino gave an example of how the anti-donation clause has been a barrier, citing services for women and families affected by domestic violence. Most counties and cities don’t have a dedicated department to address domestic violence and rely on nonprofits, he said, which are funded through contract.
But if the facility for that nonprofit needs plumbing fixtures or a new electrical system or a new roof, the city or county would have to take ownership of the facility so that government funding can go directly to the project.
“And that is the dilemma,” said Ortiz y Pino. “And it’s not just about legislative money. Local government money can’t go there either.”
The legislation making this move possible would be called the Vibrant Communities Act. It outlines the application process for requesting public funds, the review process for vetting requests and making recommendations to the Legislature, and the agreement for the use of funds and ownership of assets, according to the presentation.
According to the presentation, the measure was developed with input from lawmakers, local governments, nonprofit leaders and the Department of Finance and Administration.
Sen. Moe Maestas, D-Albuquerque, expressed his support.
“It just drives me crazy when someone in committee says, ‘This violates the anti-donation clause’ and the whole room empties and we can just move on to the next bill,” Maestas said, adding that he proposed change. The law would allow the state to provide government services more efficiently through nonprofit organizations.
