FAMILY LEAVE WILL HAVE NM SEEING RED
We hate to tell you we told you so (not really) but the proposed leave programs in House Bill 11 show a lot of red ink. Recently, the Legislative Finance Committee released its fiscal impact report (FIR) on HB 11, which seeks to provide a two-part leave program. Part one is called Family Wellness leave, which is funded by new payroll taxes on employees and employers. For prescribed reasons, up to six weeks of paid leave can be taken. The second part is called Welcome Child, which provides up to 12 weeks of unpaid leave and $9,000 per child in a “rebate.” Since no funding mechanism is provided in the bill, presumably the costs will be taken from the state’s general fund starting in 2028. Based on the estimated births in New Mexico each year, the cost to the general fund is $193 million, which is NOT included in this year’s budget. In other words, it’s a deficit from the get-go unless the state ponies up the bucks. Moreover, the amount of the rebate increases each year as it is adjusted upward for the cost of living. Wow! That’s a lot of money, but it’s only half the story.
So, how about the Family Wellness program financed with new taxes. Two of three scenarios characterized in the FIR have us seeing red. 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” scenario. Under the “high 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. The scenarios are based on different assumptions about how many people will participate – high, medium and low amounts. According to the FIR, “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.”
What’s that translate to in taxes? The program begins taxes on Jan. 1, 2027, for employers and July 1, 2027, for employees. The tax is .2% of employee wages, split 55% paid by the employee and 45% by employers into a fund. However, the secretary of Workforce Solutions must have an actuarial study done and adjust rates to ensure fund solvency. 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%. The bill, however, limits tax increases to .1% per year, putting the deficit squarely on the backs of all taxpayers. In other words, the Legislature would have to bail the fund out, much like was necessary with unemployment insurance during COVID.
Not only is HB 11 on shaky ground financially, but it imposes huge hidden costs as small businesses struggle to find part-time employees to fill in for absences (virtually impossible in many situations) or simply do without, working remaining employees overtime or cutting back services. New Mexico is a poor state and, given the whopping increases in the price of everything, every dime counts for families struggling to make ends meet. This is a program many employees don’t want to pay for and may never use. We’re seeing red.
SENATE PASSES OVERBROAD
$340 MILLION GREENHOUSE EMISSIONS FUND
The Senate today debated what amounts to a $340 million climate change project fund that allows just about anything to get state taxpayer dollars as long as it purports to reduce greenhouse gas emissions. It’s called the Community Benefit Fund.
Senate Bill 48 creates the Community Benefit Fund and transfers in $340 million from the General Fund. That funding, according to sponsor Senate President Pro Tempore Mimi Stewart (D-Bernalillo), can be used for projects that address climate change or reduce greenhouse gas emissions.
The Chamber has relayed concerns to legislators that this bill is so broadly drafted that taxpayer dollars will pour in with little to no guarantee of results or return on investment. The bill has no way to measure outcomes or whether taxpayers are getting their money’s worth from these “green” projects.
Several senators, all Republicans, offered a total of seven floor amendments and carefully discussed each over a span of three hours. Stewart declared each amendment “not friendly,” which signals supporters of the bill to vote against them.
One amendment would have required the installation of electrical vehicle (EV) chargers in the Roundhouse so the state’s leaders could use EVs. Another would have required the governor, lieutenant governor and employees of the Environment Department to use EVs.
Sen. Shannon Pinto (D-McKinley & San Juan) talked about how difficult it would be to drive an EV across the Navajo Nation. There’s not a single EV charger there.
Sen. Craig Brandt (R-Sandoval) introduced an amendment to include nuclear energy in the types of projects that could be funded by the overall bill. Brandt said, “nuclear energy is the cleanest and least expensive form of energy. There is no better clean energy than nuclear.” Once again, bill sponsor Stewart declared the amendment unfriendly, saying, “it just doesn’t fit in with this bill.”
Once the amendments ran out of juice, senators voted on the bill itself, untouched by floor amendments that all failed on straight party-line votes. The bill passed 23-15, again, with all Democrats voting for and all Republicans voting against.
The bill now heads over to the House and starts its journey there. We do hope the House puts the brakes on it, or at least adds real guardrails to protect such a huge chunk of our public money.
PREMATURE ARTIFICIAL INTELLIGENCE BILL
IS NOW HEADED TO HOUSE FLOOR
We hear a lot about Artificial Intelligence – AI – and most of us probably use or are exposed to AI tools or systems every day. However, there is considerable concern over how the use of AI might affect our lives…and not in a good way. That concern has sparked Rep. Christine Chandler (D-Los Alamos, Sandoval & Santa Fe) to sponsor House Bill 60. This measure seeks to ensure that your friendly robot can’t use data in a way that causes discrimination, resulting in loss of opportunity for a job, health care, a mortgage or other important life events. Seems like a reasonable proposition – and it is. The bill provides for notifications to consumers by developers and organizations using AI software. The attorney general is tasked with enforcement.
But, like so many things, the problems are in the details. The bill received a “do-pass” recommendation on an 8-3 vote, sending it next to the House floor.
The Chamber has some concerns about these details, as President and CEO Terri Cole described in her prepared testimony:
“Our bottom line is that it’s too much, too fast. In our minds, there are a lot of questions yet to be answered. It’s standard marketing practice to sort and select target markets that will be most interested in a service or product. Are those left out discriminated against?
“I looked at the NCSL list of what other states are doing – most are in early stages of developing legislation, and most often it’s specific to a specific problem, like sexual abuse of children, or they’re forming task forces. From what I can see, Colorado has adopted a comprehensive law that hasn’t gone into effect yet, and there are big problems still being worked out. The American National Standards Institute is working to establish national standards from which we could learn. This issue needs much more study and consideration. Please vote ‘no’.”
We respect that the sponsor has spent considerable time and has made presentations to interim committees and, indeed, is working hard to listen and respond to concerned parties. Still, there’s a way to go based on opposition expressed at the House Judiciary Committee hearing. Chief among the opponents are insurance companies, which are already regulated in this regard by federal and state laws. Both Colorado and Virginia have exempted them from their AI laws. Others point out that some applications could be rendered useless, while others say that developers will be discouraged from working in New Mexico.
Proponents suggest the bill is tailored only to software that would result in discrimination involving “consequential” decisions, i.e. decisions about important things like those mentioned above. In our view, it’s just too soon to enact something this complex and far-reaching. We should watch as a few other states roll out their legislation and look for additional guidance before jumping into a lot of unknowns. There’s that old law of unintended consequences nipping at our heels again. Is that a real dog or. …?
SENATE GETS A BILL THAT WILL HELP
PROTECT THOSE WHO PROTECT ALL OF US
A common slogan of a police department is to “protect and serve.” Indeed, this is exactly what our law enforcement officers do day in and day out. They often have to face violence in the course of their daily duties. It’s a tough job – they run toward danger in order to protect us. The least we can do is provide them the maximum support and protection under the law.
That’s why House Bill 103, Aggravated Battery on a Peace Officer Penalty, sponsored by Rep. Andrea Reeb (R-Chaves, Curry & Roosevelt) is so important – it would move the penalty for assaulting a police officer from a third-degree to a second-degree felony. What this means in practical terms is that the statute of limitations for prosecution is increased from five to six years, the basic sentence is increased from three to nine years, and the potential fine is increased from $5,000 to $10,000. Apparently, members of the House were in tune with this proposal, sending it to the Senate on a vote of 66-1 with no debate.
SPECIAL UTILITY RATES FOR LOW-INCOME
CONSUMERS ON THE WAY TO THE SENATE
Like everything else, the price of energy for electric and natural gas service has increased. House Bill 91, sponsored by Rep. Christina Ortez (D-Taos) and Patricia Roybal Caballero (D-Bernalillo) seeks to allow the Public Regulation Commission (PRC) to approve low-income rates for gas and electric customers or other programs that can help the low-income customers lower their home energy bills. According to Ortez, low-income consumers spend as much as 20% of their household income on utility bills.
El Paso Electric, PNM and New Mexico Gas Company all support the measure, as does the Greater Albuquerque Chamber of Commerce. The bill provides an exception to the general rule of cost-based ratemaking. Currently, the PRC has been given exceptions for economic development rates, rates designed to retain load, or energy efficiency programs aimed at lowering energy costs for low-income customers. HB 91 would allow, but not mandate, an additional exception. Opposition is based on concerns that the cost of lower rates to low-income consumers will result in raising rates to other customers to subsidize the rate reduction.
This concern about “cross subsidization” surfaced in the form of two amendments. The first was offered by Rep. Rod Montoya (R-San Juan). His amendment would have set the poverty level defining “low income” at 400% of the federal poverty level. That’s estimated to be $120,000 for a family of four. In other words, “low income” would include a great number of utility customers, thus thwarting shifting costs to middle- and upper-middle-income customers. The amendment was tabled on a vote of 37-24.
A second amendment, offered by Rep. Mark Duncan (R-San Juan), would have stipulated there could be no cost shifting if a low-income rate were to be offered. Duncan has the same concern voiced by several representatives, namely costs of the subsidy would be shifted to middle-class customers. That amendment was tabled on a voice vote.
After having taken nearly three hours of debate, the bill was sent to the Senate on a vote of 42-25 along party lines.
AROUND THE ROUNDHOUSE
Coming to Agreement – Enter the Conference Committees
As we get to the part of the session where bills are “crossing over,” i.e. being passed to the other chamber, it’s important to know what happens if a bill is amended in the “other” chamber. This can happen, for example, with the budget bill. The Senate adds its amendments to House Bill 2, reflecting expenditures that the Senate wants.
The bottom line is a bill cannot be sent to the governor for action until both chambers have agreed to the same, identical version of the bill. Using the budget bill as an example, after the Senate passes the bill, it is then returned to the House for what is known as “concurrence in amendments,” i.e. determining whether the House will accept the Senate amendments. If the House concurs, then the bill is off to the governor.
Non-concurrence
However, if the House refuses to concur, the chief clerk notifies the Senate. The Senate is asked to “recede” from its amendments, i.e. withdraw them. If it does not, then a conference committee is appointed to work out an agreement.
Each chamber has three members of the committee appointed by the Senate president pro tempore and the speaker of the house, respectively. Usually, this is two members from the majority party and one from the minority party. The “conferees” attempt to work out a solution. An agreement is reached only if at least two members from each chamber vote in favor. If agreement is reached, the “conference report” is sent to each chamber, which can only accept or reject the report (the report is yet another version of the bill). If no agreement can be reached, such is reported to each chamber. New conferees might be appointed, or the legislation might just die for lack of agreement.
Oil and Gas Is What Fuels, and Funds, New Mexico
The state Senate declared Feb. 24, 2025, as “New Mexico Oil and Gas Day” this week. During the presentation on the House Floor, senators recognized the oil and gas industry for its vital contributions to New Mexico.
Minority Leader Bill Sharer (R-San Juan) emphasized that oil and gas intersects every facet of daily life: food production, transportation, housing, heating, building materials and more. The industry is a critical component of New Mexico’s economy and drives much of our public spending.
Here are the statistics that were read on the Senate Floor:
In 2024, the oil and natural gas industry generated $13 billion in state and local revenue.
- $7.4 billion went directly to the General Fund – that’s 49%.
- $5.5 billion was allocated to the General Fund Operating Reserve.
Education and Public Services Funding
- $2.3 billion went to state education funding, benefiting 300,000 students, 900 public schools and 9,580 public school teachers.
- $600 million went to higher education, and $279 million for the construction and renovation of public school facilities.
Other Allocations
- 90% of funding for the Early Childhood Care and Education Fund was provided by the oil and natural gas industry.
- $1.2 billion supported matching federal Medicaid funds.
- $964 million was appropriated for new capital outlay projects statewide.
Employment Impact
- The oil and natural gas industry is recognized as the largest private-sector employer in New Mexico, directly and indirectly providing more than 100,000 jobs.
Sen. Pete Campos (D-Colfax, Guadalupe, Harding, Mora, Quay, San Miguel & Taos) added his thanks to the oil industry, acknowledging its efforts to protect our environment. “I want to thank you very much, and of course to the oil and gas industry, I want to thank the many employees and the people that continue to stay in New Mexico, and contribute, if you will, to the well-being of New Mexico, and most importantly, continue to work to make improvements so that our environment is going to be much better.”
Sharer wrapped up the presentation, saying, “the cleanest barrel of oil in the world comes from New Mexico. Clean not only because the oil itself is clean, but the way New Mexicans produce the oil is clean. … If we increased production in New Mexico and sold it to Asia. … We’d be doing absolutely the best thing we could possibly do for the planet, because all of a sudden our clean energy would be replacing the dirty energy that’s used almost all over the world.”
SIGNING OFF FROM SANTA FE
We thought maybe showing the Roundhouse with snow would get something going. We noticed that HB 11, the family leave and welcome child program, is back on the third reading calendar. It was sitting in committee, we assume for some tuning up. As our article points out, there’s some big-time fiscal issues to deal with, and the bill doesn’t even have a referral to the House Appropriations and Finance Committee. Go figure.
Long floor sessions are beginning to blossom. The Senate will have both a day and evening session tomorrow, and we think it won’t be long until we see the same on the House side. Republicans, being in the minority, debate at length in order to slow things down in hopes of staving off legislation they don’t favor. Democrats, being in charge, want to move their ideas forward as fast as possible. It’s a constant tug of war, but that’s how sausage gets made. Thanks for joining us today, and we’ll be back tomorrow with more news and views. Good night.
