New Mexico Legislation – Second Session Of The 55th Legislature

The Second Session of the 55th Legislature has adjourned Sine Die as of noon February 17, 2022

A Few of the Bills that have Passed Both the House and the Senate Await the Governor’s Signature Budget:

The Legislature’s main task during any session, but especially during a 30 day budget session is, of course, to pass a budget. As approved by the House and Senate, HB 2, the General Appropriation Act of 2022, makes recurring general fund appropriations of $8.486 billion for the budget year that starts July 1, 2022. Last year’s budget was $ 7.4 billion. This budget was released January 2022. During session a conference report is established. The conference report is really an amended version of the entire budget – all 220 plus pages- that reflects the changes agreed to by all. Here are the changes recommended in the conference report and adopted by both Chambers:

1. $1 million is added to the Regulation and Licensing Department for cannabis control and operations.
2. $500,000 is added to the Crime Victims Reparation fund to assist victims of violent crime.
3. An additional $5 million for executive agency compensation. This corrects an earlier miscalculation, apparently.
4. Return $75 million to reserves from $125 million set aside for development of hydrogen hubs that this legislation did not pass and reassign $50 million to the New Mexico Finance Authority to fund broadband and transportation projects under HB 55, which would have established the process for forming public-private partnerships but also did not pass the Senate. This $50 million simply stays in the general fund.
5. Strike the language tying $67 million in criminal justice reform funds to passage of SB 231. Instead, revert to the controlling language in HB 2 as passed by the House. With these amendments, the total recurring spending will be $8.491 billion raising reserves to $2.49 billion or 29.3% of recurring spending, up from 28.5% as proposed by the Senate version of the budget.

There were two items that the House wanted in the conference report but were rejected by the Senate conferees: $30 million for expansion of rural health care delivery and $5 million for soil and water conservation districts.

You may read the full Budget Bill HB2 at https://www.nmlegis.gov/ and the Summary of HB2 document from New Mexico Finance Department here Here

Tax Bills

HB 102 Entity -Level Tax Income & Payment: will allow pass-through entities to take advantage of an IRS designation as they complete their tax returns; as pass-through entities, the net-income subject would be exempt from personal and corporate income tax. There’s currently a $10,000 limit on the amount of state and local taxes an individual may deduct for regular federal income tax purposes. HB 102 offers a workaround for pass-through entities by allowing direct taxation at the entity level, rather than taxing the individual the income eventually comes to. It’s a little technical, but the end result is that it benefits New Mexico businesses and simultaneously bumps state tax revenue, which is why sponsors dubbed the measure a “unicorn bill.”

If the Governor signs it, New Mexico would join 19 other states in enacting this legislation.

HB163 Tax Changes: After five floor amendments, this bill now goes to the Governor’s desk for signature.

HB 163 Summarized

One-time $250 rebates to single filers making $75,000/year or less and $500 to married couples filing jointly.
Reduces the GRT by 1/8 of a percentage point this year and another 1/8 of a percentage point next year, for a total 1/4 percentage point reduction over two years (25 cents of savings on every $100 purchase). If state revenue falls in coming years, a “trigger” in the bill automatically repeals this meager benefit.
Exempts Social Security benefits from income tax for married couples making $150,000 or less and for single filers making $100,000 or less. (This was introduced both in the House and in the Senate as individual bills that were not passing on their own, so it was rolled into a bill to help push it through). It is a good move since it removes double taxation on the benefits, helps seniors cope with rising inflation and lessens a stain on New Mexico’s reputation as a place to avoid during retirement.
Enacts a GRT exemption on feminine hygiene products.
Provides very minor pyramiding relief, allowing deductions for the purchase of professional services in the manufacturing sector.
An income tax exemption on military retirement pay, increasing from an exemption on the first $10,000 of income this year to $30,000 over the next two years. Good move here. Not only should we honor our veterans for their service – it’s the right thing to do – but we are competing for skilled labor and veterans bring a wealth of training, knowledge and experience. This could be a great workforce recruitment tool.
Extension of the solar market development tax credit and a sustainable building tax credit provision.
$1,000 tax credit for frontline nurses that served during the pandemic.

SB 212, Capital Outlay Bill

SB 212 will fund $827.7 million in capital projects for entities throughout the state. $681.1 million of the total package is funded through severance tax bonds, $30 million comes directly from the state’s general fund, and $116.6 million comes from other state funds. Other stats of note regarding the bill are:
$407.3 million goes towards state agencies, schools, and judicial projects;
$390.4 million goes towards projects identified by the Governor and members of the House and Senate to address local and regional projects statewide; and,
$30 million for tribal projects statewide.

Awards Listed: 462 ANGEL FIRE WATER TANKS REPLACEMENT $75,000 to plan, design, replace, repair and refurbish water supply tanks in Angel Fire in Colfax county
472 ANGEL FIRE PLAYGROUND EQUIPMENT CONSTRUCT $80,000 to plan, design, construct, renovate and equip a playground at the Angel Fire community center in Angel Fire in Colfax county.

HB219 Public Peace, Health, Safety, & Welfare Elected County Officials Salary Caps (Salaries are allowed to be raised for the first time in many years)

Chapter 67, Section 2, is amended to read:
“4-44-4.1. Class B Counties–High Evaluation–Salaries.
Colfax and Taos Counties are in this category–
The annual salaries of elected officers of a class B county with an assessed valuation of over three hundred million dollars ($300,000,000) shall not exceed, for:
A. County Commissioners, thirty-four thousand seven hundred twenty-five dollars ($34,725) each;
B. Treasurer, eighty-seven thousand ninety three dollars ($87,093);
C. Assessor, eighty-seven thousand ninety three dollars ($87,093);
D. Sheriff, ninety thousand seven hundred ninety-five dollars ($90,795);
E. County Clerk, eighty-seven thousand ninety-three dollars ($87,093);
F. Probate Judge, thirty thousand four hundred fifty-four dollars ($30,454).

Crime Bills

HB68: Criminal Code Changes: After many amendments, passed both House and Senate and is now on the Governor’s desk. Any and all of the passed bills may be line item vetoed or approved by the Governor. This bill was substituted in Senate Judiciary to include the following bills: HB 69, HB 79, HB 84, HB 86, HB 96, HB 124, and SB34 and contains components of HB 5 and SB 225, HB 141 and SB 3. New material is also included in the bill that relates to standards for police officer training and a re-constitution of the oversight of law enforcement certification.

HB 68 Summarized

It creates a new crime and tougher penalties for serious violent felons who possess a firearm
Enhances penalties for the brandishing or discharge of a firearm in the course of committing other serious crimes – like drug deals or aggravated burglary.
Creates a new crime of criminal threat, or making a statement that causes the disruption of a public place, especially schools.
Creates the crime of “aggravated fleeing” of a police officer, increasing the penalty when someone recklessly flees from law enforcement, especially when an injury occurs as a result.
Eliminates the 6-year statute of limitations on second degree murder, which especially aids in the successful prosecution of so-called “cold” murder cases. (The Senate Judiciary Committee stripped a penalty enhancement for second degree murder out of the bill)
Creates a new crime of operating a chop shop and increases penalties for metal theft.
Enables funding for Violence Intervention Programs across the state.
Expands the kinds of programs qualifying for crime reduction grants.
Sets up a fund to make retention payments to officers (equaling 5% of an officer’s salary) at five-year intervals and to fund statewide police recruitment and retention.
Creates three new judgeships to help in clearing dockets.
Requires courts to turn over GPS monitoring data on released defendants to police and prosecutors during a criminal investigation. Pre-trial GPS monitoring – GPS monitoring data must be provided promptly to law enforcement in the course of their criminal investigations. Up to $4.5 million is available to ensure 24-7 GPS monitoring statewide. The Administrative Offices of the Courts agree they can and will provide this service
Increases the death benefit for a fallen officer’s family from $250,000 to $1 million, the most generous in the nation.
Makes it a felony to threaten judges or their families.
Reorganizes police training and certification boards and requirements, including requiring police training in things like de-escalation and crisis intervention.

Education Summary

We are THRILLED that legislation making it easier and more equitable for charter schools to access facility funding was passed unanimously in both chambers. The overwhelming eventual support masks just how difficult this multi-year effort has been. It marks an incredible moment of support for charter schools in a Legislature that has often not treated them favorably.

Teacher pay will be raised by 7%, though extended learning was unfortunately not made mandatory.

The Lottery Scholarship was preserved (and fully funded for the next four years), and Opportunity Scholarships for non-traditional students were expanded making free college tuition a reality for most New Mexicans. The opportunity scholarships offer the possibility of making a significant contribution in workforce training as well as building a bridge to a college degree for those who can’t attend college full time because of work and family commitments.

Significant funding has been provided to attract more students to nursing, including a pilot program at four colleges that will offer “free ride” scholarships to see if that helps address the critical need for more nurses. Likewise, significant funding has been provided for loan repayment and financial aid to deal with the critical shortage of 1,000 teachers statewide.

HB73 Educational Retirees Returning to Work: Allows retired educators to return to the classroom without having to give up their retirement pension.
Our state’s teacher shortage is far from new, but the pandemic has taken districts almost to their breaking point. There are around 1000 teacher vacancies statewide, and recruitment efforts will take time to make a difference, sponsors say. This bill will allow teachers to “double dip” – receive their pension and return to work for pay – for up to 36 months.

Bills to Support Business Growth Goes to Governor

HB 7 Opportunity Enterprise Act: Creates a new revolving fund for the New Mexico Finance Authority and the Economic Development Department to administer together, to make contracts for enterprise assistance that supports economic development opportunities. The new program will complement LEDA, JTIP, and other economic development tools.

HB 104 Venture Capitol Program Act: creates the New Mexico Venture Capital Act, and a fund to go with it, to support new, emerging, or expanding businesses that can help create jobs and diversify the state economy.

HB 2 General Appropriations Act 2022: contains $35 million in the budget to get the 2 above bills started. As we’ve noted before, there isn’t enough venture capital in the state to foster the entrepreneurship we need – and this is one way to help change that. With no restrictions for industries or business sizes, the program will allow the New Mexico Finance Authority, under the supervision of its board, to make awards to nearly any business that can make the case that its growth will create jobs and diversify the economy.

Bills that Failed to Pass

HB4 Hydrogen Hub Development Act: Tabled on January 28th by the House Energy, Environment and Natural Resources Committee. This bill was a top priority of the Governor.

HB 14 Clean Fuel Standard Act: Despite it being a top priority for the Governor, the Speaker and the Senate President Pro Tempore, who is the sponsor of this bill, for the second year in a row a clean fuels bill has failed in the House . The bill died by a tie vote in the House. It included an amendment added to SB 14 that would have allowed PNM to continue operating the San Juan coal-fired power plant through the end of the year in order to avoid summer electricity shortages. (How this issue might be legislatively addressed is unknown). Rural legislators were especially unhappy with SB 14 because of the longer distances they drive and concerns that fuel prices would increase even more, if the bill became law.

HB 173 Rural Infrastructure Crisis Response Act: This bill would have created a rural infrastructure crisis response fund within the State Treasury to fund rural infrastructure repair and replacement projects.

This is just a small sampling of passed or failed bills. All bills introduced during this session and their status are listed at https://www.nmlegis.gov/.