Legislative Finance analysts and coalition partners told the Legislative Finance Committee on Wednesday that the Land of Enchantment Legacy Fund’s first full year of expenditures reached every county and supported tens of thousands of acres of conservation and watershed work—but structural changes would increase long‑term returns and make more money available for projects.

LFC analyst Julissa Rodriguez told the committee that the Legislature had appropriated roughly $350 million into the Conservation Legacy Permanent Fund and $50 million into the Land of Enchantment distribution fund in 2023, and that the first distribution from the distribution fund to agencies totaled about $12.6 million in FY25. “The conservation permanent fund is managed by the State Investment Council with the same risk‑return profile as a state land grant permanent fund,” Rodriguez said.

Why it matters: LFC staff and coalition members said the distribution fund holds tens of millions in cash that is not invested at the same rate as the permanent fund. That “trapped balance” earned about 2 percent in the distribution fund compared with roughly 7 percent in the permanent fund, LFC staff told the committee. Moving the distribution fund balance into the permanent fund and using a program fund to smooth distributions would increase available annual distributions, the brief said.

Coalition and agency findings: Britney Fallon of Western Resource Advocates, representing the Land of Enchantment Legacy Fund coalition, reported that legacy‑fund programs completed work on more than 60,000 acres in year one, distributed funding to every county, and helped create local jobs and subcontracting opportunities. Fallon said 100% of the FY25 legacy allocations were spent and that programs leveraged other funding—including federal and private matches—conservatively estimated at an additional $5 million.

LFC recommendations: Analyst Austin Davidson presented several technical changes the brief recommends for the 2026 session: (1) transfer the distribution fund balance into the permanent fund so it can be invested at the SIC’s rate; (2) convert the distribution fund into a program fund (modeled on the early childhood trust fund/program setup) so full balances are drawn and distributed rather than sitting idle; (3) change the statutory distribution language to a percentage‑of‑permanent‑fund rule (LFC proposed a 5% draw) and (4) require that unspent program‑fund dollars revert to the permanent fund after an initial spending period.

Operational notes and challenges: Coalition members and agency staff told the committee that state agencies had to revive older statutes, hire new staff and run unfamiliar grant processes to distribute the new funding; some grant programs required rule changes and longer application timelines. The coalition flagged federal funding freezes on some matching grants as a continuing challenge, and said some applicant groups (for example, soil and water conservation districts staffed by volunteers) need simpler application processes or additional assistance.

Legislative follow‑up: Committee members agreed to pursue statutory adjustments during the 2026 session and to coordinate with state agencies on rule changes. Representative Chatfield asked whether a legislative reallocations or HB2 transfer could be used to free trapped balances immediately; committee staff said some steps could be done in the budget but recommended statutory fixes for a durable solution. Members also requested lists of contractors, project descriptions and before/after documentation from agencies for oversight and transparency.

Bottom line: The legacy fund produced measurable on‑the‑ground conservation results in its first fiscal year, but analysts and coalition members urged statutory changes so more of the fund’s principal can be invested at competitive returns and yield larger recurring distributions for conservation projects.