PAID FAMILY & MEDICAL LEAVE DIES IN ‘SENATE FINANCE’

On Saturday morning the voices of small-businesses and employees in Gallup McKinley County and across New Mexico were finally heard! By an overwhelming vote of 8 - 3 the Senate Finance Committee gave House Bill 11 a DO NOT PASS! The Chamber has strongly opposed the measure, as President and CEO Bill Lee said in his testimony (which also featured this morning on KKOB radio):

 Mr. Chairman – Members of the Committee,

“I’m Bill Lee President and CEO of the Gallup McKinley County Chamber of Commerce. We are opposed to HB 11 for multiple reasons.  The fact that there is no funding mechanism for the 193 million dollar ‘Welcome Child’ portion of the bill. Overreaching and very broad definitions which open the legislation to fraud and abuse. Solvency issues that will amount to hundreds of millions in deficits and of course, the added large costs placed on small businesses to pay overtime or find, hire, and train temporary employees.

Beyond all these fiscally irresponsible problems…we would like to address the concerns of workers who must pay taxes for at least 6 months before they can draw any benefit in the Family Wellness portion of the bill.  That tax payment comes out of their take-home pay.  Once eligible for benefits they may only receive up to only 67% of their wages, and they will then be taxed again for the income they paid for. They will also have the additional burden of filing a 1099 at the end of the year. By the time employees are finished paying taxes, on top of taxes they will only receive around 35% of what they have paid for.

Gallup, like most small communities in our state, is very tight knit. Last Thursday night my wife and I went out to dinner, the cashier at the restaurant recognized us, she asked that I relay this message to you, “please tell them we can’t afford any more taxes, no matter how small they think it is…it all adds up.”

She’s right! It all adds up to the largest tax increase for hard working New Mexicans.

On behalf of our business members, our City, County, and School District but most importantly for the thousands and thousands of people they employ, please vote no on HB 11.”

Once again, we are proud to have been on the front lines helping to organize many businesses into a coalition that have joined us in opposition, including the Greater Albuquerque Chamber, the Rio Rancho Chamber, the Santa Fe Chamber, the New Mexico Chamber, the New Mexico Business Coalition, the New Mexico Cattle Growers Association, the New Mexico Farm and Livestock Bureau and another 30 business participants. Most of all we want to thank our more than 300 member businesses who acted by calling and emailing legislators at critical times during the fight.  We also wish to thank 1^st American Traders, Murphy Builders, The Halona Plaza, Rocket Café, Supersmith Inc., Amigo Automotive, and Silver Dust Trading, who contributed to our legislative advocacy and joined us for strategic meetings in Santa Fe.

These McKinley County Legislators have continued to go against the party-line vote and have joined us in our opposition:

   

    Senator George Munoz                      Senator Benny Shendo                   Representative Martha Garcia           Representative Wonda Johnson          Representative Patty Lundstrom

Senate Finance Chair George Muñoz (D-Cibola, McKinley & San Juan) asked why the approach to this topic isn't to take baby steps, see how that works and then grow the program. "We always take this to the extreme," Muñoz said. The Senator also pointed to the unsustainable CPI inflator on the Welcome Child refunds which would boost the total cost from $193 million to around $260 million in just a few years. For at least three years the Chamber has been screaming from the rooftops the exact same thing Senator Munoz told the sponsors, - “…start with parental leave and build from there.” We would point out that Representative Rebecca Dow (R-Dona Ana, Sierra, & Socorro) had such a proposal that was immediately tabled in its first committee. Her legislation would have been ½ the cost of the $36 million to just begin to set up the bureaucracy of HB 11. It was sustainable and affordable, but party-line politics saw to it that it would never see the light of day.

Other committee members probed for clarity in definitions only to receive the answer "that will be covered in the rulemaking." Sen. Nicole Tobiassen (R-Bernalillo) pointed out that under the federal American Recovery Plan Act (ARPA), employees will be liable for income taxes on both the paid Family Wellness and Welcome Child payments. This could reduce the amount of actual payment to around 30% of normal take-home pay. Moreover, many taxpayers aren't familiar with filing 1099 forms and could likely run afoul of the tax laws through no real fault of their own.

Session after session, such complicated and "extreme" proposals have failed to pass the Legislature. We hope the next time this comes before the legislature (and the sponsors have already vowed that it will) that they all take Senator Muñoz's advice. Let's take some baby steps and build a future where we know the real costs and risks. With so much uncertainty about federal budget reductions and the potential for declining prices and production of oil and gas, now is NOT the time for a moon-shot on a new program of such great consequence and complexity.

 

small cuts BIG INCREASES!

GOOSE WITH THE GOLDEN EGG GETS THE AXE!

House Bill 14, sponsored by House Tax and Revenue Committee Chair Derrick Lente (D-Rio Arriba, Sandoval & San Juan), has some good news…but also plenty of bad news. The good news is the Working Families Tax Credit is converted to a New Mexico Earned Income Tax Credit (EITC) – giving New Mexicans who make under $70,000 the gift of having no state personal income tax obligation. Because we like to sometime see the glass as half full, we would like to believe this to be the start of getting rid of the personal income tax on everyone. Taking a step toward real tax reform to to make New Mexico more competitive as a place to live, work and, do business.

Brace for the bad news. It will cost the state treasury about $75 million a year. And, guess what? The state's out of money. The heck you say? You told us at the beginning of the session that there was something like $3 billion in new state revenue! Well, there was, but the Legislature has done spent it all. So, now what will the poor old Legislature to do? Raise taxes! They are going to raise taxes on the goose who lays the golden eggs - the oil industry. One tweak of the excise tax and like magic, another $140 million. Please make note of the Please make note of the fact that the vast majority of New Mexico oil gets shipped out of state, so no one's the wiser. No one, that is, except the folks who have to invest in drilling wells and can move their operations over the state line to Texas.  

Besides the obvious impact on the industry, it's fiscally irresponsible that the House of Representatives did not reserve the money needed in the budget to fund this tax cut. With the surplus of cash at the disposal of the Legislature, this is very poor fiscal planning. It’s not too late, we suggest that the House talk with the Senate, where the budget is still pending, and figure this out. Do away with some pork packed into the budget. Cut $75 million out of a nearly $11 billion budget and, shazam, you've got the money to fund this tax cut without harming the Goose with the Golden Egg.

It’s more bad tax policy! It will make the state that much more dependent on oil and gas revenue. In case you hadn’t noticed, the “drill baby drill” policy in Washington D.C. is impacting oil prices. When the session started in January, oil was just over $80.00 a barrel, as of this writing it was barely above $67.00 a barrel. With lower oil prices, consumers will benefit by lower prices at the pump… but, that means the state loses revenue. It's a bad time to increase taxes on a commodity that may well fall in value. Legislators are driving this bus - we've been here before, and the fiscal cliff is looming large…better pump the brakes on this run-away spending! 

The bill now proceeds to the Senate where they will have about another $65 million to allocate thanks to the revenue expected off of this tax increase. What to do with all that dough?  Why of course it will go to favorite pet projects. The rumor mill suggests these are some of those projects: support for foster families, GRT elimination for medical service providers and funding for the UNM medical school construction. The Senate will likely take this bill up very promptly. It will most likely go to the Senate Tax, Business and Transportation Committee and then to the Senate floor, and, when approved, back to the House for concurrence. We'll keep you posted.