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Panel urges backfill of depleted regulatory funds as RLD seeks narrow increase
Summary
Regulation & Licensing Department superintendent Clay Bailey told the Appropriations subcommittee that depleted dedicated funds (the mortgage regulatory fund and the securities education fund) and rising costs for staffing, Salesforce licensing and leases are driving a modest FY27 general‑fund request; the committee adopted the LFC recommendation and asked staff for a two‑year backfill analysis.
Clay Bailey, superintendent of the Regulation and Licensing Department, told the Appropriations & Finance subcommittee that the department’s FY27 recurring request reflects a narrow increase driven largely by benefits, IT licensing and building costs. Bailey said RLD currently has roughly 400 FTEs with “a 22% vacancy rate” and that a hiring freeze implemented after a fund shortfall in 2025 slowed operations.
Bailey outlined how two dedicated funds used to run recurring operations — the mortgage regulatory fund (MERF) and the securities education training fund — were substantially depleted. “Those funds had been depleted,” he said, and that shortfall forced the department to shift to general fund revenue for recurring costs. LFC analyst Noe Montano told the panel the LFC’s recommendation is to backfill those funds with two years of general‑fund appropriations to stabilize operations while revenues recover.
The presentation detailed division‑level pressures: construction plan review and inspection turnaround goals, a push to reduce plan intake time, the cost of the department’s Salesforce licensing that supports licensing turnaround, and increased building lease costs in Albuquerque. Bailey said the department has been asked repeatedly to keep flat budgets and that this request is intended to “keep us surviving” rather than expand programs.
Members pressed for specifics. Representatives asked why the Financial Institutions Division lost accreditation; RLD and FID leaders said the unit was placed on probation in 2022 and lost accreditation in 2023 because it lacked sufficient examiners, and that recovery requires hiring and multi‑year training. On manufactured housing, Bailey said the division has historically relied on the MERF fund and that raising permit fees sufficient to self‑fund that division would be legally and politically difficult.
The committee moved to adopt the Legislative Finance Committee recommendation for the department’s recurring budget; the motion passed without recorded opposition. Members requested follow‑up materials on the MERF and securities fund revenue projections, the cost implications of compacts and background‑check changes, and options for special appropriations to clear prior‑year deficiencies.
What’s next: The committee approved the LFC recommendation and directed staff to work with RLD on options for a fund backfill and potential legislative fixes for fee authorities and compact phasing.
