A. The local governing body of a county or municipality may by ordinance establish a local government permanent fund and a local government income fund.

B. The local government permanent fund shall constitute a fund in the treasury of the county or municipality into which may be deposited at the end of a fiscal year an amount of the unappropriated general fund surplus. The amount that may be deposited into the local government permanent fund is any portion of the unappropriated general fund surplus that is in excess of fifty percent of the prior fiscal year’s budget of the county or municipality. Money in the permanent fund may be appropriated or expended only pursuant to approval of the voters of the county or municipality as provided in Subsection E of this section.

C. Money in the local government permanent fund may be invested by the local board of finance for the county or municipality in the types of investments specified in Section 6-10-10 N.M. Stat. Ann. and as specified in Sections 6-10-36 and 6-10-44 N.M. Stat. Ann., except as provided in Paragraph (2) of Subsection D of this section. Earnings from the investment of the permanent fund shall be deposited in the local government income fund in the treasury of the county or municipality. Money in the income fund may be budgeted and appropriated by the local governing body for expenditure for any purpose of the county or municipality or may be deposited in the permanent fund.

D. Investment authority for a local government permanent fund shall be as follows: (1)     if the fund is less than forty million dollars ($40,000,000), it shall be invested as other funds of the local government; and

(2)     if the fund is forty million dollars ($40,000,000) or over, it may be invested as funds of class A counties are invested and, if the fund is managed by an investment advisor that is registered with the federal securities and exchange commission and that currently manages assets with a value of at least five hundred million dollars ($500,000,000), the fund may also be invested in the following:

(a) corporate debt securities, provided that: 1) the total amount invested in securities issued by the same corporation or related corporate affiliates shall not exceed five percent of the market value of the permanent fund; 2) the securities shall be denominated in United States currency; 3) the securities shall be rated AA- or higher by a nationally recognized statistical rating organization; 4) the final maturity of the securities may not exceed five years; and 5) the total amount invested pursuant to this subparagraph and Subparagraph (b) of this paragraph in the aggregate shall not exceed thirty percent of the market value of the permanent fund;

(b) commercial paper, provided that: 1) the total amount invested in securities issued by the same corporation or related corporate affiliates shall not exceed five percent of the market value of the permanent fund; 2) the securities shall be denominated in United States currency; 3) the securities shall be rated in the highest rating category by a nationally recognized statistical rating organization; 4) the final maturity of the securities may not exceed two hundred seventy days; and 5) the total amount invested pursuant to this subparagraph and Subparagraph (a) of this paragraph in the aggregate shall not exceed thirty percent of the market value of the permanent fund; and

(c) asset-backed securities, mortgage-backed securities, collateralized mortgage obligations or commercial mortgage-backed securities, provided that: 1) the total amount invested pursuant to this subparagraph shall not exceed five percent of the market value of the permanent fund; 2) the securities shall be denominated in United States currency; 3) the securities shall be rated AAA by a nationally recognized statistical rating organization; and 4) the final stated maturity of the securities may not exceed ten years.

E. The governing body of a county or municipality may adopt a resolution calling for an election on the question of expenditure of any amount of the local government permanent fund for a specified county or municipal purpose. The election shall be held within sixty days after the action of the governing body. The election shall be called, conducted, counted and canvassed substantially in the manner provided by law for general elections within the county or special municipal elections under the Local Election Act [N.M. Stat. Ann. Chapter 1, Article 22]. If a majority of the registered voters of the county or municipality voting on the question votes for the expenditure of a specified amount of the local government permanent fund for a specified county or municipal purpose, then that amount of money shall be available for appropriation and expenditure by the county or municipality for that purpose. If a majority of the registered voters of the county or municipality voting on the question votes against the expenditure of a specified amount of the local government permanent fund for a specified county or municipal purpose, then money in the local government permanent fund shall not be expended or appropriated for that purpose. Following an election at which the question was not approved, the question shall not again be submitted to the voters of that county or municipality within one year of the date of that election.