The New Mexico 52 Legislation Second Session will convene tomorrow January 19, 2016 for a 30-day budget session. This year, we expect the number of issues on the Governor’s “call” will make this look like a 60-day session compressed into a month. Standby for lots of debate and maneuvering.
When the Legislature adjourned on March 21, 2015, in the Governor’s post session statement, she said, “So, what happens next? We enter the bill review period, and there will be good legislation that passed, some good examples of how elected members can and should work together. But their work, overall, will fall short of the people’s standards.” One major item that didn’t get done was the passage of the nearly $300 million capital outlay (construction projects) bill and a significant tax incentive/reform bill. That was left to a special session that accomplished both on June 8, 2015.
There are a host of major issues that did not get resolved in last year’s general session plus some new concerns to be addressed. Money will be tight, much tighter than projections made in August and December of 2015.
Looking ahead, what to expect, Here’s a quick preview of some issues:
It’s not going to be a fun year. For every $1 drop in the price of oil, the state loses about $10 million in revenue. At $29 per barrel, revenues decrease $200 million, wiping out any “new money” (perhaps a bit offset by increased gross receipts tax revenues as a result of consumers having more money to spend on other items). Nevertheless, all signs are pointing to a hunker down, hold the line, flat budget.
Oil prices are in the tank (not your tank, the other kind of tank). That means significantly less revenue derived from taxes, leases and royalties. The state’s December revenue forecast estimated $232 million in “new money”, i.e. revenue above ongoing costs that legislators can use for new initiatives or to bolster ongoing programs. But, that’s down from $292 million in August. And, the December forecast is based on $49 per barrel price of oil. As of this writing, the price is south of $30. A lot goes into the forecast and a “new money” projection is likely to hit the pavement soon…like, next week soon! Revenue forecasts are prepared by the Consensus Revenue Estimating Group, which consists of representatives from the Department of Finance and Administration, the Taxation and Revenue Department, the Department of Transportation and the Legislative Finance Committee. This group’s purpose is to reach agreement on how much money is available to be spent in the upcoming fiscal year. This saves a great deal of time and controversy when the legislature convenes, thereby allowing the legislators to focus on how the money will be spent. This group has proved to be a very valuable resource and we’re a bit concerned by the recommendation contained in the Legislative Finance Committee’s proposed budget to appropriate about one-third of the “new money” ($77.6 million) on a contingency basis, allowing the money to be spent only if the projected revenues materialize. The money would be spent on across the board salary increases for state employees. There are a multitude of pressing needs and many are not convinced this is the top priority.
Medicaid Costs Shooting Up
Medicaid coverage was expanded significantly under Obamacare and new enrollees have exceeded all expectations. The federal government is currently on the hook for 100% of the increased costs but that drops to 95 percent in 2017 and 90 percent in 2020. And, the feds only pick up 70% of the non-expansion costs of the program. As a consequence, the Governor’s Budget recommends a $69 million increase in this year’s budget with more to come in the future. The Legislative Finance Committee budget recommends a $78.8 million increase, which represents 34% of all new spending.
Capital Outlay Reform
Both Governor Martinez, and several other Governors of the past, have criticized the process of dribbling out funds across the state. The Governors argue that a more focused approach is needed to allocate funds to the projects that make the biggest impact on the state. The New Mexico Chambers are dedicated to a process, which is transparent and reviews and ranks big, infrastructure projects based on merit. Reform legislation is expected…Ever try wresting a bone from a pit bull.
Making gross receipts taxes less gross: The gross receipts tax system in New Mexico has become a patchwork quilt of high rates, special exemptions and “pyramiding” of taxes on top of taxes. The problem is how to fix it. Efforts will be made at reform this year but we’re suspecting this is a subject that will take more than a 30-day session to resolve. Different political philosophies not to mention ox-gorings will have to be resolved – no small task but one that needs to be undertaken, for sure.
Really, it’s time – and then some. This has been an issue for several years and it’s time to find a sensible solution before citizens and businesses alike are not just inconvenienced but outraged. With terrorism on the rise, it’s only sensible that the state do its part to ensure the safety of critical facilities and airports.
Children in dangerous situations need increased protection and intervention by state and local officials. Several proposals need action including expansion of the baby Brianna law (named after Brianna Lopez, a 5-month-old Dona Aña girl, raped and beaten by her mother, father and uncle in 2002); tougher penalties for physical and sexual abuse of children; more child advocacy centers and family support workers; tougher penalties against purveyors of child pornography; and, enhanced home visiting and wellness centers.
Crime & Punishment
The spate of violent crime that’s infected our community last year emphasizes the need for some serious attention, including a constitutional amendment to allow courts to hold known bad guys without bail. We also need to find ways to attract and retain more police officers, stiffen penalties for violent crimes, expand the “three strikes” law and allow courts to order treatment for some mentally ill.
There are several issues affecting employers that failed to win approval last session that will be addressed; including right-to-work, reducing the amount of workers’ compensation that can be received for injuries resulting from drug or alcohol use and fixing those places in our unemployment insurance policies where New Mexico is an outlier, continued enhanced funding for the JTIP program, funding ($950k) for a State Comprehensive Broadband Plan and Priority for Rural Infrastructure, the Tourism Department and maintaining the Economic Development Department closing fund at $50 million are top priorities.
Bring student achievement up to an acceptable level, ending social promotion and rewarding high performing teachers top the things to do list.
And, it’s an election year. Partisans will be staking out their territory looking to score points that can be used for or against candidates at the next election. Unfortunately, the last session saw a lot of the all-to-familiar Washington-like gridlock. With the Republicans controlling the House and the Democrats the Senate, expect many hot embers to be poppin’, especially since there is a sharp philosophical divide on many of the top issues. The “maiden voyage” of the House Republican leadership is over and we expect they will launch out of the starting blocks with an ambitious agenda. Senate Democrats have been adept at bottling up House initiatives. Will there be room for compromise or will entrenchment be the order of the day? Time, a short 30 days, will tell.
The highlight of which will be the Governor’s state of the state address. This will give us a good idea of the issues she will be putting on the Governor’s call.
The Albuquerque Chamber Legislative Round-Up, (shortened version). The Chamber Legislative Roundup, published during the New Mexico Legislative Session by the Greater Albuquerque Chamber of Commerce provides information on local and state public policy and business issues that affect you.