October 23, 2019

Legislative Session Is Over

Legislative Session, until 2020, is over- SINE DIE!!!

The 1st session of the 54th Legislature launched into action with the rapid passage of 42 bills from the aptly named “rocket docket.” In slightly less than three weeks, on February 4, the Governor had signed these measures, which, for the most part were bills passed in previous sessions but vetoed by the Governor. By January 30, the House had begun evening sessions and had its first Sunday session on February 17. And, on March 6, the traditional Hoops for Hope Senate-House basketball game was interrupted by a call of the Senate – that has never happened before.

But now the work just begins for the Governor. She has until April 5 to act upon the large amount of legislation headed her way. After that date, if she has not signed a bill into law, it is deemed pocket vetoed.

Here is a quick recap of a few of the items on her desk:

House Bill 6, this session’s major tax bill, is headed to the Governor.

  • The working families tax credit was increased to 17%
  • Internet sales will now be taxed
  • A significant portion of revenues from the motor vehicle excise tax will now be sent to the road fund – for state and local construction projects
  • Market-based sourcing and a reasonable form of mandatory combined reporting for corporations remained in the bill
  • The capital gains deduction was reduced from 50% to 40%
  • The motor vehicle excise tax is increased a full percentage point
  • A top tax bracket of 5.9% will be established for married couples filing jointly and earning at least $315,000, married couples filing separately earning $157,000 or more, and single individuals earning $210,000 or more.That’s a big shelf being created between those paying 4.9% and these so-called “high-earners” who will pay 5.9%. However, this rate increase goes into effect ONLY IF revenues to state government grow by less than 5% between FY19 and FY20. If revenues grow more than 5%, then the tax code stays like it is. (It’s not really a conventional or optimal way to set tax policy. Establishing long-term tax rates based on the amount of revenue growth in one particular year is really unusual. But, that’s what the legislative compromise produced and it leaves everyone in New Mexico – again – hoping that oil and gas revenues continue to grow and other industries pitch in to help out.)
  • Cigarette taxes will go up, and e-cigarettes will be recognized as tobacco products and taxed at 12.5% of market value at the wholesale level.

FY20 BUDGET AND CAPITAL OUTLAY

General Fund

Unprecedented oil and gas production set the Legislature up for a spending problem – how to spend all the money. Many veteran budget writers say it’s more difficult to set a budget when there’s lots of money. With over a billion dollar surplus and more of the same expected next year, the budget swelled to $7.1 billion, up more than 11% with $1.4 billion, or 20%, to be set aside in reserves.

Public Education

In light of the Yazzie lawsuit, public education got the lion’s share of the increase, receiving a $449 million (16%) increase bringing total spending on education to $3.25 billion or about 47.5% of the total general fund spend. SB 1 and HB 5 provide the structure for dispersing most of the new funding with an emphasis on boosting the allocation factor for at risk students, supporting extended K-5 learning, increasing teacher salaries and building up pre-K programs. The Chamber was highly supportive of these increases.

Economic Development

  • LEDA was augmented to the tune of $60 million with the possibility of going to $75 million with a further uptick in revenues.
  • JTIP was just slightly underfunded at $10 million.
  • Both the Economic Development and Tourism Departments received a 20% lift to their budgets.
  • Spending for roads and related infrastructure was given $250 million from the general fund along with $89 million for maintenance projects and $50 million for local road development, for a total of $389 million.
  • Through SB 2, the nearly $200 million backlog of film credit tax credits will be paid down over the next two years. The film cap was raised from $50 million to $110 million. New incentives were put in place to encourage long term post production facilities to locate in the state which offer full time jobs. Incentives were also established to hire New Mexico workers and to film outside the Santa Fe – Albuquerque corridor.

“Junior” Bills Augment Base Budget

In a year of abundance, “junior” budget bills were resurrected – we haven’t seen these since the Richardson administration. Both the Senate and House ran junior bills.

SB 536 the Senate “junior” budget bill contains $30 million in spending and splits half to recurring and half to non-recurring projects or programs. Individual Senators designated a wide range of appropriations. Each Senator received $714,000 to spend as they saw fit.

Below are some of the justice reform appropriations provided by the Senate “junior” bill:

  • $218,500 to expand pre-trial services across the state, which will help prepare criminal histories of defendants for judges and monitor defendants who are released prior to trial
  • $307,000 to expand law enforcement-assisted diversion programs in Rio Arriba, Santa Fe, Bernalillo and Dona Ana counties
  • $397,000 to the New Mexico Sentencing Commission to help create a criminal justice data-sharing network; a key historical impediment to efficient crime-fighting has been an inability or unwillingness to share, integrate, and use data to differentiate offenders and tailor interventions
  • $257,000 to the second judicial district attorney’s office to hire prosecutors and staff to focus on diversion programs and specialty courts

HB 548 the House “junior” budget bill and contains $30 million in appropriations, half in recurring and half in nonrecurring. Each House member received approximately $428,000. Below are a few reform appropriations provided by the House “junior” bill:

  • $485,00 to support pre-prosecution diversion efforts
  • $300,000 to deploy more fingerprint machines statewide and connect them to the Department of Public Safety
  • $510,000 to improve the collection, integration, and sharing of criminal justice system data by the New Mexico Sentencing Commission
    HB618- $145,000 in the bill to fund the STEM boomerang program, which is designed to bring homegrown top talent who have left the state back to our workforce in New Mexico.

Capital Outlay

SB 280 appropriates $935 million for a variety of capital outlay projects in this bill. $385 million is for statewide projects, $250 million is for Governor sponsored projects and $300 million is for Legislature projects. The Senate and House each get $150 million, which breaks down to about $3.6 million per Senator and $2.2 million per Representative.

Minimum Wages

SB 437 will raise the minimum wage to $12 per hour over a four-year phase-in with no indexing to the CPI. The bill keeps tipped wages at a lower level of $3/hour and adds an $8.50 per hour student wage to promote hiring of students.

PRC Reform

A constitutional amendment will be placed before the voters to change the PRC from a five member elected body to a three member Governor appointed commission. The new structure focuses on a judicial like selection process and underscores experience and qualifications over politics. If approved by the voters, this should go a long way towards improving the poor reputation of New Mexico regulation.

Energy Transition Act

SB 489, Act to transition New Mexico electrical generation to 100% clean energy by 2050. The bill uses a unique low interest bond financing mechanism to pay down the debt generating plants in San Juan county while using a chunk of the bond proceeds to provide economic development and job training support to the community. Replacement power will be constructed in San Juan county to help bolster the property tax base of the local school district. The Chamber supported this bill as it balances many needs in an integrated and thoughtful manner. It has already been signed by the Governor.

Early Childhood Department

SB 22 A new state department to pull together all early childhood programs from four separate departments to bring greater focus and accountability has already been signed by the Governor.

PUBLIC SAFETY

HB 267, deals with predicated evidence based findings and addresses:

  • Expanding pretrial services;
  • Pre-prosecution diversion programs;
  • Attraction and retention of personnel;
  • Public defender services in rural areas and to improve social work case management;
  • Creation of a data sharing network;
  • Establishment of pre-trial diversion programs;
  • Providing transitional re-entry homes for those released from correctional facilities, and;
  • Increased funding for behavioral health services and personnel.

HB 342, deals with offenders with behavioral health issues and addresses:

  • Offenders with behavioral health diagnoses receiving target interventions;
  • Immunity for those assisting with overdose cases;
  • Procedures for pre-prosecution diversion programs;
  • Requirements for crime victims’ reparations;
  • Accurate Eyewitness Identification program, policies and training provisions;
  • Duties of the N.M. Sentencing Commission.

SB 173, made it to the Governor’s desk, will allow towns with less than 10,000 population the option of dissolving a municipal court and transferring local ordinance matters to a magistrate court upon the approval of the Supreme Court. Often caseloads are so small that two separate courts aren’t necessary. The related measure was a constitutional amendment, SJR 8 that sought to allow closure of probate courts in smaller towns and transfer of cases to state courts, died in House committee.

HB370, the Expungement of Criminal records would completely wipe out arrests and many types of convictions from a person’s public criminal record. While expungement of lower level offenses has some merit, this bill goes way too far by allowing arrests and convictions for very serious crimes to removed from public record – as though they never happened. This puts employers in the position of being unable to do a thorough background check on potential employees. Would we want a kidnapper employed in a day care center? Or a forger keeping the books? We think not and urge the Governor to veto this bill and come back with a bill that truly erases minor crimes and arrests that might block an otherwise good citizen from getting employment. Both Governor Richardson and Governor Martinez vetoed similar legislation in the past and we hope this Governor will do the same so that a better approach can be achieved. We strongly opposed this bill at the Chamber, but is sitting on the Governor’s desk.

SB 323 will make possession of one ounce or less of cannabis an infraction, like a parking ticket, but not a crime. This for us is a valid workforce issue in that a youngster may have been caught with a small amount of marijuana and now has a criminal conviction, which could block that person from getting a job or advancing. Getting qualified workers is always a challenge and this impediment should be removed. This bill is also awaiting action by the Governor.

A few bills we were following for interested people that were defeated are HB51: Abortion Bill, HB356: Recreational Marijuana Bill and both bills pertaining to Daylight Saving Time. So once again we will change our clocks back an hour in the Fall.

Many gun control bills passed, many more educational bills, bills dealing with liquor laws, land issues etc. passed For a full list of all of the bills that passed please visit Complete List of Legislation 54th Session.

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