Welcome to the Legislative Roundup, your update on the most important news from the Legislature

IT'S OVER!

Last Day's Wrap Up

Charter School Funding Fix Passes 2nd Chamber

The Senate voted 36-0 this morning to make charter school facility funding more predictable, sending House Bill 207 to the governor with unanimous support.

As Sen. Antonio Maestas (D-Bernalillo) summed it up on the floor, the bill changes the “may” in statute to a “shall” because “bankers freak out on ‘may,’ so this makes it clear they will get paid.”

There was no further debate or discussion.

As we’ve explained, unlike their district counterparts, charter schools are on their own for figuring out where they’ll actually provide instruction to their students. And so charter schools often have to make do with old buildings, settle for vacant retail space in strip malls, and get creative to make every square foot do double or triple duty, like using a large, open area for the “cafegymnatorium” (cafeteria, gymnasium and auditorium). And up until 2022, if a charter school opted to purchase or build to suit, it was on them to find their own loans – and on the private market where they couldn’t get the same interest rates that should be available to them as public schools.

New Mexico has made progress over the last few years when it comes to facilities, with new laws that establish a revolving loan fund to rectify this disparity. As Maestas explained, HB 207, sponsored by Reps. Joy Garratt (D-Bernalillo) and Joshua Hernandez (R-Sandoval), will make it mandatory, rather than optional, for the Public School Capital Outlay Council (PSCOC or the Council) to provide grants from the Public School Capital Outlay Fund to districts for the purpose of lease payments for facilities, including charter school facilities.

Matt Pahl, Executive Director of Public Charter Schools of New Mexico, testified as an expert witness in committee that this bill doesn’t change any practices; it just changes the perception of risk in the fund by mandating consistent state support for charters’ leases.

The Chamber has supported HB 207 throughout the session because we believe all public school students deserve safe and comfortable facilities where they can learn and grow.

Senate Concurs, Sends Scholarship Updates Through

In the waning minutes of the 2024 legislative session, the Senate by voice vote concurred with the amended version of Senate Bill 239.

The Lottery and Opportunity Scholarship Changes, sponsored by Sen. Siah Correa Hemphill (D-Catron, Grant and Socorro) and George Muñoz (D-Cibola, McKinley and San Juan), makes important changes to the scholarship requirements that are all about getting college students that certificate or degree. The bill includes clarifications to some definitions, like counting credit requirements on a per-year basis instead of per-semester and making summer semesters eligible for scholarship coverage. That means a student can take a course load of 12, 12 and six hours rather than 15 and 15, which could better work with their personal responsibilities and keep them from dropping out.

SB 239 as amended also ties the new maximum distribution for the Opportunity Scholarship to inflation and allows high school students to earn college credit through dual enrollment without having those credits counting against the maximum covered by these programs. And it has important guardrails including rulemaking authority for the Higher Education Department, as well as a sunset provision to prompt legislators to review these changes to ensure they’re working, and others.

The Chamber has supported the bill throughout the session, testifying it “makes good changes that will ensure students can take full advantage of these programs the way we want them to. It clarifies really important requirements and grants our college students meaningful flexibility.”

This is a great bill that will serve our students and give us more graduates. Here’s to getting the governor’s signature on it!

Around the Roundhouse

Smokey a Signature Away From Getting his Plate

In its final vote of the 2024 session, the Senate “blazed” through House Bill 251 as substituted, sending the governor legislation to grant Smokey Bear a personalized license plate on his 80th birthday.

The story behind the plate: The Library of Congress Blogs say that while the bear began as a fictional character, “in 1950, his name was bestowed on a bear cub who was rescued from a forest fire in New Mexico. There were two back-to-back forest fires in early May 1950 in the Capitan Mountains, which are part of the Lincoln National Forest.”



HB 251 co-sponsor Sen. William F. Burt (R-Chaves, Lincoln and Otero) thanked colleagues on behalf of Lincoln County and Smokey.

Two Last Goodbyes

The Senate opened its last floor session of the 2024 session with a certificate ceremony for another senator who’s leaving the chamber. Sen Cliff Pirtle (R-Chaves, Eddy and Otero) is not seeking re-election. It was announced the 10-year veteran of the Senate will be opening Homestead Spirits, a distillery and restaurant in downtown Roswell.

Senate Majority Floor Leader Peter Wirth (D-Santa Fe) said Pirtle came in as the youngest member of the Senate “and learned quickly,” digging in to rules and decorum as well as laws. That and his intelligence “helped make this chamber a better place.”

Pirtle was commended as well for his dedication to killing “bad” bills, his amendment-writing ability as well as his wry humor and bills allowing counties to secede from the state, jettisoning Daylight Saving Time and making the day after the Super Bowl a holiday. Sen. Gerald Ortiz y Pino (D-Bernalillo) shared that when Pirtle won his seat, beating the last Democrat in the chamber from southern New Mexico, he was not prepared to like him. Then he met him at a gathering for the man he had defeated, now-Roswell Mayor Tim Jennings, and knew Pirtle was a class act.

Pirtle told his colleagues “every single one of you means so much to me. What we do in here is not as important as what we do when we are outside of this room. … Help every single person. Outside of this room, help people.”

The Senate also said a quick farewell as the clock ran down to retiring Sen. Bill Tallman (D-Bernalillo). He joined the Senate in 2017 and was heralded today as a champion of open and accountable government.

Senate President Pro Tempore Mimi Stewart (D-Bernalillo) provided a truncated “Top 10” list to poke fun at one of Tallman’s trademarks, offering as No. 1 “No more Top 10s.”

And Stewart shared that every one of the many departures from the Senate this session “hurts … we’re going to have a different Senate next year. I look forward to it."

Session Overview

At the 30,000 foot level

From the Chamber’s standpoint, the session was a successful legislative session. At the same time, the prevailing philosophy in both the House and Senate leans decidedly toward an agenda that favors ever greater spending on governmental programs.

Two dynamics continue in the Legislature: Having relatively few business voices leads to an incredibly large number of bills that would place burdens on businesses or hurt our competitiveness, and there's a growing divide between urban and rural lawmakers on everything from social issues to guns to economic matters.  

Against this backdrop, we who represent the business community too often measure our success by what didn't happen compared to what might have been. Some might say, it's like playing four quarters of defense.  

Tremendous effort was needed to halt the imposition of an unwieldy, unworkable and unmanageable paid family and medical leave act that would have left small businesses crippled by excessive employee absenteeism and new taxes (likely to escalate in the future). Despite claims by the proponents that they worked with the business community, the reality is they were unwilling to consider alternatives that business could have supported.  

Let’s hope that in this upcoming election more members get elected who have actual experience running or managing a business. Those members - Democrat and Republican - would have reference points to guide them toward a more positive outlook about economic growth and job creation - the ultimate solutions to ending poverty. Here, then, is a more detailed look at the second session of the 56th Legislature defined by the agenda we established for ourselves at the beginning of the session.

Budget and Fiscal Future

The $10.2 billion budget was developed by the Legislative Finance Committee (LFC) with an eye on the future possibility that by the end of the decade, oil and gas production in New Mexico may flatten and begin a gradual decline. With the knowledge that there is no industry that can generate the same kind of massive revenue, budget writers have adopted three key strategies: slow the rate of ongoing (recurring) spending, invest in productive one-time expenditures (like capital projects) and salt away significant amounts of excess revenues in trust funds or endowments to generate interest income for the general fund in the future. This direction aligns perfectly with the Chamber's goals - we have urged slowing the rate of spending growth, using cash rather than debt for capital projects and increasing contributions to trust funds and endowments while maintaining at least a 30% reserve. Here are some budget highlights:

• Increased year-over-year recurring spending by 6.2%, lower than the double-digit increases of the last two previous years. Slightly over 30% of recurring spending is held in reserve.
• Set aside $950 million in a Lottery and Opportunity Scholarship Trust to ensure the scholarships are available in the future.
• Placed $300 million in the "Land of Enchantment Fund," fully funding this trust which supports natural resources projects.
• Moved over $500 million to the Government Responsibility and Opportunity Trust (GRO) to be used in future years to pilot test new programs before they are included in base agency budgets. Over $300 million will be spent over the next three to four years on "GRO" projects identified by legislators and 16 other projects, some designated by the Legislature and a few by the executive.
• Continued $82 million contributions to the Severance Tax Permanent Fund, working to build a $1 billion fund by 2033.
• Financed most of capital outlay from cash, preserving infusions from oil and gas revenues to further build the fund balance.
• Placed $50 million each in trust for housing.

It's worth noting the Early Childhood Education and Care Trust fund has grown to $5 billion and is sending $250 million to the department for its programs, lowering the amount expended from the general fund. The Chamber was a key player in establishing both the department and the trust fund several years ago.

Other appropriations of significance include:

• $100 million for career technical education
• $15 million for medical professionals loan repayment assistance
• $60 million for workforce training and apprenticeships at comprehensive community colleges
• $10.5 million for LEDA and $6.7 million for JTIP
• $175 million to expand the Opportunity Enterprise Fund
• $1 million for tourism cooperative marketing and advertising and the travel trade program
• $16 million for national tourism advertising 
• $63 million for increased Medicaid provider reimbursements
• 3% compensation increase for all state employees, including public education employees
• $750 in total for road maintenance, construction and improvements
• $50 million to shore up rural hospitals
• $5 million for food banks
• $40 million to provide universal free breakfasts and lunches to students 
• $30 million for a structure literacy institute and $30 million for summer reading bootcamps for students

Stopping Legislation Harmful to Business

While intentions are usually good, sometimes the results have detrimental or unintended consequences on business. Here are some of those bills that fortunately will not become law this year:

• Paid Family and Medical Leave Act - as mentioned above, the proposed program was unwieldy, unworkable and unmanageable. In addition to its obvious burden on small businesses, the administration of the program would spawn the creation of a new 250+ employee agency that would, undoubtedly, mushroom over time. The bill died on the House floor, having passed the Senate.
• Reinstituting a state board of education was stopped in the House Education Committee thanks, in part, to powerful testimony from Del Archuleta, a Chamber Board member and the last president of the State School Board before it was abolished. This back-to-the-future proposal would have only resulted in less, not more, stability due to political infighting. 
• What can only be described as punitive new regulations on the oil and gas industry stalled on the House floor. Harassing the goose that lays the golden egg is mind boggling to us, especially since that goose has but a few short miles to travel to a state with a more inviting business climate. Also stopped was the so-called "Green Amendment" to the state's constitution that is also clearly aimed at the oil and gas industry. It might also be called the Lawyers Full Employment Act of 2024.
• Monumental increases to liquor excise taxes were quite properly directed to interim study. All of us agree New Mexico has an alcohol abuse problem. Developing and implementing practical solutions is another matter. The initial tax increase proposal would have increased total revenue from $50 million per year to at least $250 million per year without a clear path forward.

Tax Reform

Following a failed attempt last session, the Senate and House tax committees held a joint hearing and collaborated on putting together this year's tax package, with each chamber contributing elements. A few of the key features included a revamping of the personal income tax brackets, lowering taxes to middle- and low-income taxpayers without raising anyone's taxes; extension of the Angel Investment tax credit; lifting the sunset clause on the military retiree pay exemption; providing tax credits for purchase of EV's; providing tax credits for manufacture of the equipment needed to produce advanced energy technologies; and, extending the GRT credit for medical services to include copayments and other reimbursements.

One provision that hurts capital formation and investment is the virtual elimination of the capital gains deduction. From the current 40%, now only $2,500 may be deducted unless the sale of a New Mexico business is involved. In that case, the first $1 million may be deducted, a provision aimed at especially helping New Mexico's small businesses.

Economic Development

As noted above, adequate JTIP and LEDA funding was provided. Additional funding for the Opportunity Enterprise Act can help provide housing for workers near new business locations. Continuing a strong national advertising program is key to attracting more tourism to the state, as is massive road improvements, including sprucing up rest stops. More and better roads also facilitate the flow of commerce.

Helping with repayment of health professionals' student loans, increasing Medicaid provider rates, bolstering rural hospitals and providing significant new hospital reimbursements all work to improve health-care delivery and attract and retain the number of health-care professionals needed in the state.

Public Safety

Another outfall of the current legislative mindset is that incarceration and punishment don't work to deter crime. It's all about behavioral health, especially substance abuse and addiction. No disagreement, the latter is a big part of the problem. However, there are "bad guys" out there that are incessantly involved in criminal activity that must be punished for the sake of justice and removed from our communities for as long as possible to protect our citizens. Two small but positive steps were taken - one is to incarcerate felons who violate their terms of release pending trial by committing another crime. It was introduced by Sen. Daniel A. Ivey-Soto (D-Bernalillo). This falls far short of establishing a presumption that felons should be incarcerated before trial for committing another crime, but it helps some. Another positive step is increasing the penalties for second-degree murder and attempted murder, introduced by Sen. Antonio Maestas (D-Bernalillo). 

We also know that quick apprehension and speedy trials are key to deterring crime. We are pleased to see significant funding provided for attracting and retaining law enforcement and other public safety professionals. A limited return-to-work for retired public safety personnel was passed and should help fill staffing shortages until new recruitment and training efforts fill the vacancy gaps.

Education

Successful public education is the key to lifting children from poverty to success. Despite massive funding increases for public education over the last several years, improved results in math and reading competency have not been forthcoming. One solution that's proving successful is structured literacy. To that end $30 million has been appropriated both for summer reading "boot camps" for students and a structured literacy institute to train teachers on this method of teaching reading.

The new Government Responsibility and Opportunity effort is clearly going to draw a bead on other problem areas and seek solutions. Legislation requiring additional school board training will make another positive contribution. And, $100 million for career technical training will hopefully attract students to pursue training and careers in much needed trades. CTE can and should be much more available at the high-school level, and the new graduation requirements passed this session should facilitate student choice to pursue courses of interest to them and which are not just college preparatory.

Signing Off from Santa Fe

Well, that wraps up another legislative session - a 30-day session that had all the earmarks of a 60-day session given the wide spectrum of issues the governor allowed to be considered. In total, 661 bills were introduced for consideration, which compares to just a little over 1,000 in the last 60-day session. We have enjoyed bringing you all the news and views of interest to the business community. As always, it is our privilege and honor to represent you before your state Legislature. Until next year, we wish you prosperity, happiness and good health. 

The Legislative Roundup, published during the New Mexico Legislative Session by the Greater Albuquerque Chamber of Commerce, provides information on local and state public policy and business issues that affect you.

For questions, please email D'Val Westphal at dwestphal@greaterabq.com.