LAST MINUTE TAX BOMB IS FAST TRACKED OUT OF COMMITTEE

PLEASE CONTACT THESE SENATE FINANCE COMMITTEE MEMBERS and register your opposition to HB 11.

Benny Shendo (Bernalillo, McKinley, Rio Ariba, Sandoval & San Juan)

• Office: 325A
• Office Phone: 505-986-4264
• Email: benny.shendo@nmlegis.gov

 Bobby J. Gonzales (Los Alamos, Rio Ariba, Santa Fe & Taos)

• Office: 217A
• Office Phone: 505-986-4362
• Email: roberto.gonzales@nmlegis.gov

Pete Campos (Colfax, Guadalupe, Harding, Mora, San Miguel, Taos)

• Office: 302B
• Office Phone: 505-986-4267
• Email: pete.campos@nmlegis.gov

Linda Trujillo (Santa Fe)

• Office: 416G
• Office Phone: 505-986-4863
• Email: linda.trujillo@nmlegis.gov

The Chamber has fought this onerous legislation for years and will continue to do so at every turn.

A recent Op-Ed in the Santa Fe New Mexican by Grover Norquist highlights the far-reaching negative impacts HB-11 will have on New Mexico.

“…This would impose a significant new tax burden on both workers and businesses — one that New Mexico cannot afford. Facing strong taxpayer opposition to their initial proposal for the largest tax increase in state history, Democrats have repackaged the bill under a new name, but it remains a costly and destructive tax hike that will hurt New Mexico businesses and workers.

New Mexico already faces one of the heaviest tax burdens in the region, with income and corporate tax rates surpassing those of all neighboring states. The tax burden makes the state less competitive for job growth and investment. U-Haul data for 2024 shows more people move out of New Mexico than into the state. The U-Haul Growth Index put the state in 37th place. Democrats are squeezing every dollar out of New Mexicans - and people are leaving because of it. 

The tax rate will be “adjusted annually,” with employees shouldering 55% of the cost and employers covering 45%, leaving the door open for ever-increasing taxes that burden workers and hinder economic growth. Any tax increase on businesses is borne by consumers through higher prices and on workers through lower wages, meaning that individuals will shoulder the burden of Democrats reckless tax hikes.

In other words, Democrats want to install a new tax hike dial and turn it up every year without a vote.

Taxpayer dollars will fund another costly program that cuts paychecks and stifles job growth. This medical leave tax takes from every paycheck, with taxpayers unlikely to recover the amount they contribute. Because the fund must maintain 140% of prior disbursements, perpetual tax hikes are inevitable.

The program ensures endless tax hikes, starting at $190 million and growing yearly, siphoning more and more money from taxpayers’ pockets. Even moderate projections show a $227 million deficit by 2031, with a worst-case shortfall of $870 million. How will they cover it? By imposing new taxes — on top of the ever-increasing tax on wages you will already pay.

Worst of all, New Mexico is sitting on a record $3 billion budget surplus while reaching deeper into taxpayers’ pockets.

Instead of returning this surplus to the people through tax cuts—like many other states are doing—New Mexico Democrats are choosing to expand government programs at the expense of workers and businesses. Raising taxes in the face of a massive budget surplus is unnecessary and irresponsible, while showing complete disregard for the financial struggles of everyday New Mexican workers and business owners.”

We couldn’t have said it better ourselves!  The proof is in the bill’s own Fiscal Impact Report put together by the independent Legislative Finance Committee.

The current version of HB 11 contains two parts. The first is the Welcome Child program, which would grant 12 weeks of unpaid new child leave (for birth, adoption or fostering) and $9,000 per family as a "refund." The second part of the program is the Family Wellness program, which grants six weeks of paid leave funded by new payroll taxes, costing employees and employers over $200 million a year with increases likely on the near horizon.

The Welcome Child portion of HB 11 costs $193 million per year, escalated each year by a cost-of-living adjustment. There is no specified fund to pay for these costs, so the Legislature will have to decide later how to cover them. If paid out of the general fund, it becomes a recurring obligation at a time when there is concern about losing significant Medicaid funding from the federal government. Some say this loss could be as much as $1 billion, but we won't know until later this year. If so, it's not exactly a great time to be locking in increased general fund expenses. 

Deeper examination of the Family Wellness portion of the bill, in 2029 (the first year after full implementation of the program) the deficit ranges from $42.4 million growing to $227 million by 2031 in the "medium" employee utilization scenario. Under the "high" employee utilization scenario, the deficit in 2029 is $350 million, growing to $870 million in 2031. Only under the "low" scenario does the fund remain in the black, and given New Mexico’s high health risks, the Fiscal Impact Report (FIR) makes it clear that it is very unlikely that the “low” scenario will be likely. 

The FIR also states, "If enacted, New Mexico would be the lowest-income state to implement a PFML program. The lower payroll base could result in the payroll contribution being insufficient to cover the needs of the fund." Here's what would happen to payroll taxes. If the high scenario plays out, the tax would go from .2% to .8%, quadrupling the tax rate. If the medium scenario plays out, the rate would go to .5%, two and a half times the original rate. Even under the low scenario, the rate goes to .3%. 

Also, there's an annual cap of .1% on tax increases. So, if raising the tax rate won't cover the costs and keep the fund solvent, then the Legislature would have to bail the fund out. Payroll taxes can't be raised until 2030, so any deficits in 2028 or 2029 would require the Legislature to pony up the bucks, and that's a lot of ponying! Again, this would be at a time when it's possible that the Legislature will be scraping up every dime it can find to backfill loss of federal Medicaid funding.

Chandler insists that a shortfall "is never going to happen" and disagrees with these calculations based on other states' experiences (it’s evidently only convenient to listen to the Legislative Finance Committee when they agree with you). Chandler says before the program goes into effect there will be an actuarial analysis performed. Given that this legislation has been under consideration for at least three years, Sen. Gabriel Ramos (R-Grant, Hidalgo & Luna) has asked why an actuarial analysis hasn't already been done so solid numbers could be examined. Ramos said, "I don't like voting for a bill that's an idea. I want to see facts." Don't we all?!

We've fought long and hard against this business- and job-killing legislation, and we're not about to give up now. Unfortunately, a very workable measure in the House, House Bill 446 sponsored by Rep. Rebecca Dow (R-Doña Ana, Sierra & Socorro), which we supported, was killed in a House committee. This more-limited measure dealt only with family leave, costing a little more than $19 million per year paid for from the Early Childhood Trust Fund, the balance of which will soon reach $11 billion.

We'll keep you posted on what happens next, but again, in the interim, PLEASE CONTACT SENATE FINANCE COMMITTEE members by email or phone using the information provided above,  let them know you oppose HB 11!

LIQUOR EXCISE TAX GETS PUT ON THE ROCKS

House Bill 417 sought to place an additional 6% excise tax on liquor consumption, be it by the glass or by the case. Today, bill sponsor Rep. Micaela Lara Cadena (D-Doña Ana) brought the bill back to the House Taxation and Revenue Committee with an amendment to leave the 6% on package sales but lower the rate on per-drink servings in restaurants and bars to 3%. The amendment failed passage by the committee. Rep. Doreen Gallegos (D-Doña Ana) summed up the opposition, noting that working people with limited budgets don't go to restaurants, they go to the grocery store. Therefore, keeping the tax higher on package sales produces an inequitable result.

No testimony was taken on the amendment or the bill, as there had previously been a full hearing on the bill. The Chamber has spoken in opposition in the past and believes with yet another year of huge revenues, any tax increase is unwarranted and unjustified. Rep. Patty Lundstrom (D-McKinley) pointed out that in McKinley County, due to alcoholism issues, the tax is already higher than the rest of the state, and she wasn't in favor of adding another 6% on top of that. With brief committee discussion, the measure was died on a tie vote of 6-6. The bill should be finished for the session.

That’s another topic for another day in our legislative updates. None-the-less, the only support came from the Sierra Club.

INTERSTATE MEDICAL LICENSURE COMPACT GETS UNANIMOUS OKAY AND MOVES TO THE SENATE

On the House floor Saturday, a number of bills were heard, including House Bill 243. The bill, Interstate Medical Licensure Compact, sponsored by Rep. Marian Matthews (D-Bernalillo), enters New Mexico in the Interstate Medical Licensure Compact for the purpose of facilitating interstate practice by physicians and improving public access to physician services.

The Interstate Medical Licensure Compact Commission would serve as the national administrative body, and the bill authorizes the governor to appoint two members to the commission. The bill sailed through both the House Health & Human Services and House Judiciary committees. The House passed it with a vote of 58-0. The bill now moves to the Senate.

E.M.S. COMPACT RECEIVES UNANIMOUS SUPPORT
NOW ONTO HOUSE JUDICIARY

Monday got off to a quick start with the House Government, Elections and Indian Affairs Committee plowing through the morning agenda. On that list was House Bill 412, Emergency Medical Services Personnel Licensure Interstate Compact, sponsored by Rep. Gail Armstrong (R-Catron, Sierra, Socorro & Valencia). The bill would enter New Mexico in the Emergency Medical Services Personnel Interstate Compact for the purpose of facilitating day-to-day movement of emergency medical services personnel across state boundaries and affording legal recognition to emergency medical services personnel licensed in one of the 28-member states. The Emergency Medical Services Personnel Licensure Commission would serve as the national administrative body, which would include a representative from New Mexico.

Kristina Fisher, Think New Mexico associate director, said the purpose of the compact is to open New Mexico’s doors to health care workers licensed in other states. She said there are about 4,000 vacancies for EMTs or paramedics in New Mexico. “This is especially important for border regions,” Fisher said. “If you have a paramedic or an EMT in El Paso, we would want you to practice easily in Las Cruces. Likewise with Durango and Farmington. Like the representative said, it’s a small bill, but we think it’s important and will help make a difference in terms of increasing our number of EMTs and paramedics."

With little discussion and no opposition, a motion was made for a “do-pass” vote. The committee voted unanimously, 9-0. The bill now heads to the House Judiciary Committee.