Economic Relief Package Wins Legislative Approval
Both the Senate and House introduced identical bills that were substantially the same as the discussion draft we shared in yesterday’s Legislative Roundup. The Senate considered SB 1 (Senator John Arthur Smith, D – Dona Ana, Hidalgo, Luna and Sierra) and the House considered HB 1 (Representative Patty Lundstrom D -McKinley). The Senate decided to meet as a committee of the whole to discuss the legislation while the House referred HB 1 to the House Appropriations and Finance Committee before bringing the bill to the House floor. Public testimony was permitted via the internet to the HAFC. At the end of the day, HB 1, which authorizes some $330 million in expenditures, passed both chambers and is on its way to the Governor’s desk. The Legislature accomplished its work in about seven hours.
A Bit of a Dust-Up in the House
HB 1 was passed by the House on a 59-11 vote with all the no votes coming from Republicans; some Republicans voted for the measure. The debate in the House became very heated when the Speaker initially blocked a vote on an amendment sponsored by Representative Rebecca Dow (R – Grant, Hidalgo and Sierra) that sought to provide a one-time payment of $600 to below-minimum wage essential workers such as childcare providers and nursing home attendants. (Senator Candace Gould (R – Bernalillo) offered a similar amendment in the Senate which was also defeated.) The Speaker ultimately decided to allow a vote on the amendment, which was tabled, and the bill then achieved final passage.
Senate Swiftly Passes HB 1 – After Hours of Debate on Its Companion
The Senate approved SB 1 as a “committee of the whole” after several hours of debate, but waited for HB 1 to be sent over. The Senate passed HB 1 on a vote of 33-5 without debate. An amendment was included in HB 1 to mirror one adopted earlier by the Senate that includes fraternal and veterans’ nonprofit organizations among those nonprofits that can apply for the business grant funds. This amendment was sponsored by Senator Ron Griggs (R – Dona Ana, Eddy and Otero) and he deserves a big tip of the hat. Within the compressed environment of the special session, it’s no small feat to gain approval of an amendment – but people know a good idea when they see it!
In both the House and Senate there were expressions of frustration that this kind of legislation had not been brought forward much sooner, as there is now a tight deadline to implement these programs by year-end. Senator Jacob Candelaria (D-Bernalillo) questioned the need for legislative action since the Governor had clearly stated she has the authority to expend federal monies.
In what are likely his last remarks to the Senate, Senate Finance Committee Chair John Arthur Smith (D – Dona Ana, Hidalgo, Luna and Sierra) expressed his disappointment that there was no agreement coming into this special session. He apologized that many good, “even great,” ideas were not included as amendments to the bill, but said that the bill was given to him by the Governor’s office – “I’m just the messenger.”
“My advice for the future is that if you’re going to have a special session, you damn well better have agreement.” Smith went on to thank the staff with whom he has worked, especially the Legislative Finance Committee staff, but acknowledged that he would not miss the 300-mile drive from Deming to Santa Fe.
We wish you well, Senator. You have been a rock that anchored the state in turbulent times. You’ll be missed.
What the Bill Does
Here’s a breakdown of what’s in the legislation:
- In total, $319 million of federal CARES act money is appropriated to bring economic relief to various groups of New Mexicans.
- $194 million will be used by the Department of Workforce Solutions to provide a one-time $1,200 benefit to those who are currently on an unemployment benefit program, who have recently exhausted unemployment benefits since September 12, or who will enroll in a program within seven days after the effective date of this bill.
- $100 million will be sent to the New Mexico Finance Authority to provide grants to businesses and nonprofit organizations with up to 100 employees; no grant may exceed $50,000. Priority is given to those businesses in the hospitality and leisure industries or who were especially affected by public health orders related to the pandemic. NMFA is given great latitude in how to administer the funds, but they must seek to disperse funds to rural as well as urban areas.
- The Department of Human Services will receive a total of $10 million for assistance to low-income individuals. $5 million is set aside to issue $750 payments to individuals who did not receive a COVID relief check from the federal government. Another $5 million will be used to provide emergency funding to food banks throughout the state.
- $15 million will be administered by the Department of Finance and Administration to provide emergency house assistance (help with rent or mortgage payments) and for assistance to the homeless.
NMFA Rules: A Critical Next Step
The New Mexico Finance Authority will develop the criteria for who may apply for the grants so development of their rules will be a critically important next step. One factor for the business community is the point in time we count the number of employees on the payroll. In our view, it should be the current payroll, not the number that was employed prior to the pandemic. Many businesses have experienced horrific layoffs which, on its face, should indicate that they are a business that has experienced significant harm due to the public health orders implemented to deal with the COVID-19 pandemic.
Small Business GRANTS – Not Loans
Because the state constitution prohibits giving public money to individuals or corporations, grants cannot be made using state funds. However, there is no such prohibition with regard to federal funds. Thus, the $100 million appropriated in this legislation is for grants that do not need to be repaid. 94% of New Mexico businesses have fewer than 100 employees, so the vast number of businesses could be eligible. The exact application and awards process will be left to the New Mexico Finance Authority.
Hand-Ups to the Unemployed
Currently, there are more than 114,000 New Mexicans unemployed, and with the recent surge in coronavirus infections, there is concern more layoffs could be on the horizon. The funding provided in this legislation could support payments to more than 160,000 people. Any money not expended under this legislation by December 28 will be transferred to the Unemployment Insurance Trust Fund, which is currently in the red and paying benefits from loans made by the federal government.
As of November 19, the state has borrowed more than $150 million. By the summer of 2021, this debt will likely grow to $400-$500 million. How to repay the federal loans will be a significant topic in the upcoming 60-day session. Several proposals have been discussed at various interim committee hearings this summer and fall.
Other Legislation – Introduced but Not Considered
The Governor’s proclamation calling the special session was very specific as to what could be considered by the Legislature – namely the items included in HB and SB 1. However, Republicans in both the House and Senate introduced other measures aimed at limiting the Governor’s authority to issue public health orders without the involvement of the Legislature. Senator Michael Padillia (D – Bernalillo) introduced a bill to provide funding for the Department of Information Technology to develop and implement a plan to expand broadband service to underserved areas to facilitate online learning and commerce. Senator Padilla has long championed expanded broadband infrastructure, and he stated he will be bringing legislation to the 60-day session.