
HALF-A-BILLION-DOLLAR TAX INCREASE CLEARS ITS FIRST COMMITTEE
Today, the House Health and Human Services Committee approved House Bill 11, the proposed Paid Family and Medical Leave Act (PFMLA) on a straight 6-4 partisan vote: D’s in favor, R’s opposed. When the fund is fully operational in FY 29, the LFC estimates that employees and employers will pay $507,860.6 million in new taxes to support payment of benefits. In fact, Rep. Alan Martinez (R-Sandoval) claimed that this would be the largest tax increase in the history of New Mexico, which earned him a rebuke by Chair Liz Thomson (D-Bernalillo) who considered the assertion to be inflammatory, as well as his persistent questioning about the “fee” actually being a tax.
Whether it would be the largest tax increase ever or not, it’s one heck of a tax increase, period. And, according to the fiscal impact report or FIR, for a variety of cultural and economic factors unique to New Mexico, the tax could double in order to support high employee use of paid leave. Among those factors is the provision for “safe” and “exigency” (military related) leave. Most states do not include these factors in their programs. Just to put the issue of “tax” vs. “fee” to rest, Rep. Jennifer Jones (R-Doña Ana, Hidalgo and Luna) read a definition that basically says, if it takes money from someone, it’s mandatory, and it’s for government services, it’s a tax.
Terri’s Testimony
Along with a bevy of businesses and business organizations, including the New Mexico Restaurant Association and the New Mexico Chamber, Terri spoke in opposition, making the following points:
- The scope of the bill that allows such a large amount of leave – three months – for such a wide range of reasons, for such a wide range of people, will create incredible instability and administrative challenges in the workplace.
- The bill imposes a new tax, at a time when we are flush with cash, on both employers and employees.
- The bill, as written, would require a massive new bureaucracy of at least 200 or more employees.
Let’s put the magnitude of this program in perspective. The taxes imposed are more than twice that of the unemployment insurance program. And that’s just for openers. According to the FIR it’s quite possible that the tax will need to double in order to ensure fund solvency. And these increases need only to be approved by the Secretary of the Workforce Solutions Department, not the Legislature. As mentioned above, there are several factors that could well lead to New Mexico having high employee participation and, therefore, higher costs than other states, including:
- high numbers of multigenerational households
- low-income workers more often take paid leave
- New Mexico ranks unfavorably on serious health conditions
- New Mexico has a high incidence of violence
- bill includes factors for taking leave not in other state programs
- more people are taking leave – from 2012-2018 increased 2 percent while number of workers decreased 3 percent
Washington state’s tax increased from .4% to .92%. Rhode Island, Massachusetts and California have all had to raise their rates, and these are all much wealthier states with higher tax bases than New Mexico. Moreover, allowing the self-employed to opt in and out could result in a “dine and dash” abuse of the program. Some may opt in long enough to cover a pregnancy, collect the benefits, and then opt out.
Biggest Problem? Filling in for absent employees
Everyone in business knows what a challenge it is to find qualified employees – we so often find businesses with reduced hours of operation or turning away work because there aren’t enough people to provide a service. Heck, the Workforce Solutions Department itself has a 17% vacancy rate – and this is common in the state government – they can’t find qualified workers either despite good salaries and generous benefits. Denise Montoya testified on behalf of the New Mexico Home Builders Association. While there’s a critical demand for new housing, finding qualified workers is a huge challenge, and passing this bill won’t help.
The fact is, the leave granted under this legislation can be stacked along with other leave benefits. The leave can be taken in as little as eight-hour increments. Since it’s hard to find qualified employees for full-time jobs, what are the odds that a qualified employee can be found for a temporary position that will likely result in their termination when the full-time employee returns to work? Slim to none. The burden falls especially hard on small employers, where one worker often represents a huge percentage of that business’ output. As was heard in testimony today, this could spell the death knell for many small entrepreneurs.
More bureaucracy at a high cost
The Workforce Solutions Department estimates it will require 209 additional employees (or contract workers) to fulfill the mission of this bill. That would increase the size of WFS by a third. However, the number of applicants could increase dramatically over time, as has happened in the state of Washington, for example. The current estimate of workforce and related costs (considerable IT expense) is $49 million per year – costs that must be paid out of the tax revenues put into the fund.
What next?
The bill now moves to the House Commerce and Economic Development Committee. The bill could be set for hearing very soon. We’d appreciate you contacting members of this committee to register your opposition: click here for committee member contact information. We’ll keep you posted on the bill’s progress and, of course, we’ll be there to register the Chamber’s strong opposition.
CHAMBER UNVEILS 2025 LEGISLATIVE AGENDA
In case you missed it, the Chamber Board of Directors on Friday approved the Chamber’s 2025 legislative agenda. Click here to review the entire agenda. Operating under the theme of “New Mexico Competes,” the agenda identifies four critical goals and the specific actions needed to achieve these goals. They are:
- We must make New Mexico safer – our reputation as a crime-ridden haven of repeat offenders must end to make our communities safer and more attractive as a place to do business.
- We must reduce the tax burden on families and businesses. Our gross-receipts tax system is a real roadblock to business location and expansion.
- We must have high-performing schools. Our children deserve no less – being the worst in the nation is intolerable.
- We must make major reforms to medical malpractice insurance and take other bold steps to attract and retain medical professionals. Health care really isn’t health care if you can’t get an appointment with a doctor or access to a specialist.
INTRODUCING NEW LEGISLATORS
HOUSE
District 30: Elizabeth Torres-Velasquez, D-Albuquerque
Rep. E. Diane Torres-Velásquez will represent District 30, which covers the Bear Canyon area of Northeast Albuquerque. Torres-Velásquez was unopposed in her primary, won the general election and fills the seat vacated by Natalie Figueroa, who was elected to the Senate.
- Torres-Velasquez holds a Ph.D. in special education from the University of New Mexico, where she is an associate professor.
- Her academic work is diverse, including innovative teaching methods, learning disabilities and multilingual/multicultural studies.
- Her community involvement includes work with MALDEF and work to bring about the groundbreaking Martinez v. New Mexico lawsuit declaring education as a fundamental right.
- Torres-Velasquez’s policy involvement also includes addressing water scarcity and sustainability, crime and safety and economic development.
District 31: Nicole Chavez, R-Albuquerque
Rep. Nicole Chavez will represent District 31, which encompasses the North Albuquerque Acres area, adjacent to Sandia Pueblo in Bernalillo County. Chavez won both her primary and the general election and replaced Bill Rehm, who retired from the Legislature after the 2024 session.
- Chavez is a strong advocate of criminal justice reform, having lost her oldest son (who had been accepted to the Air Force Academy) to random violence. She went on to found a victims advocacy organization, Robbed New Mexico.
- She is the director of Sales, Outreach and Retention for Presbyterian Healthcare Services and advocates for greater access to health care.
- She underscores her business experience and, consequently, her support for economic development.
- Her children attended public schools and UNM, leading Chavez to strongly support public education.
SENATE
District 15: Heather Berghmans, D-Bernalillo
Democrat Heather Berghmans, a policy analyst and finance consultant, will represent District 15, which now covers the area in Albuquerque east of Interstate 25 and roughly from Menaul to north of the Arroyo del Oso Golf Course. She won the general election and replaces Democratic Sen. Daniel A. Ivey-Soto, whom she defeated in the 2024 primary.
- She recently worked as finance director for the New Mexico House Democratic Campaign and has been director of special projects for Speaker of the House Javier Martinez, policy analyst for Speaker of the House Brian Egolf, and lead policy/committee analyst for the New Mexico House of Representatives.
- She also served on the city of Albuquerque’s 2022 Redistricting Committee.
- Prior to her policy and legislative work, Berghmans worked as an operations director for high growth e-commerce companies and on the administrative/operations team at New Mexico Kids Network. She received her undergraduate degree at UNM and a master’s in public administration from the UNM School of Public Administration.
District 18: Natalie Figueroa, D-Bernalillo
Democrat Natalie Figueroa, a former state representative and a high school Spanish teacher, will represent District 18, which includes Albuquerque’s Northeast Heights roughly from Lomas to Academy. She was unopposed in the primary, won the general election and replaces Democratic Sen. Bill Tallman, who retired after the 2024 session.
- Figueroa is the daughter and granddaughter of teachers.
- She co-sponsored the Chop Shop Bill, credited with an 11% decrease in Albuquerque auto thefts, and co-authored the Organized Retail Crime Bill that’s designed to keep repeat offenders off the streets.
- As an educator, Figueroa has been awarded grants and scholarships in three states, has served as a mentor teacher for the University of New Mexico’s School of Education, and works with the Storehouse, the Asbury Pie Café, and assists with tax preparation for the elderly as well as service projects in Nicaragua, Tanzania and Costa Rica.
AROUND THE ROUNDHOUSE
The New Mexico Oil and Gas Association has put out some very interesting facts about the impact of the oil and gas industry on state and local governments. Despite this huge contribution that has allowed increased programs, services and even a few tax cuts, we continue to see legislation introduced that increases the regulatory burden on this most valuable industry. Go figure. Here’s a slice of some of those facts:
TIGHT RULES QUESTIONED
The chair of the Senate Judiciary Committee announced rules today for how senators can present and discuss legislation before the committee. As with prior sessions, he has also set very strict rules for testimony from members of the public when supporting or opposing legislation.
For example, you can’t just walk in to a committee hearing and make your views heard. You have to e-mail at least an hour before the hearing, you have to submit your testimony in writing ahead of time, and if you oppose a bill, you are directed to coordinate with other members of the public who also oppose that legislation. This may confuse an average citizen wanting to testify who may not know who else supports or opposes a proposed law change they are personally passionate about.
Sen. Pat Woods (R-Curry, Harding, & Union) took to the Senate Floor to share his thoughts:
“…limiting debate in committee … I thought that was where we were supposed to flesh this stuff out, where we’re supposed to talk it out. … When these bills are so important that they’re going to affect New Mexico for many years in the future, how in the world can we limit discussion on those? How can we possibly do that when our constituents want to hear our voice. … We need some balance. … That’s just completely wrong, and I will object to that process.”
We recognize that committees have to manage the time allocated for testimony if they are to work their way through busy agendas. However, there’s a delicate balance to be achieved. By the way, similar rules are in place now for three committees: Senate Judiciary, Senate Rules, and Senate Tax, Business and Transportation.
SIGNING OFF FROM SANTA FE
For a while today, the House struggled to get a quorum but eventually mustered enough attendance to get some bill introductions done. The House will be back in session at 10 tomorrow and the Senate at 11. There are quite a few bills of interest in committees tomorrow. We are especially concerned about several that would, indeed, wrap more regulations and requirements around the energy industry. We’ll be reporting the results on these and many more bills in tomorrow’s Legislative Roundup – stay tuned! Until then, we wish you a very pleasant evening.