LEGISLATIVE ROUNDUP: Senate Committee Approves Paying Prevailing Wage on IRB Projects

At the heart of this debate are two things: first, are projects financed with IRBs public or private? (Prevailing wage must be paid on public works projects paid for by public funds.) Second, do prevailing wages increase the cost of projects, making New Mexico less competitive compared to neighboring states? In answer to the first question, IRBs are investments made by private industry to build a project of public benefit in exchange for tax exemptions. The private financier is on the hook for repaying the bonds. By any reasonable interpretation, these are not public works projects in the true sense. Terri Cole, president and CEO for the Chamber, provided this testimony:

“The Chamber opposes HB 6 because it will make New Mexico less competitive in attracting private investment for industrial development. We all know that New Mexico already has trouble attracting capital, so we shouldn’t make the problem worse. We also know that raising the price of anything generally results in getting less of that thing – it’s among the basic laws of economics. Increasing the cost of industrial revenue bonds will not defy that basic law.

“States around us don’t put this kind of additional cost burden on their industrial revenue bonds. Developers are consumers like the rest of us – if they can get the same thing for a lower cost, they’ll shop there instead of here. The more private sector money we can attract for infrastructure development, the less public money is needed. And that stretches the amount of money available from the public sector. While perhaps well intended, we believe that HB 6 violates another immutable law: the law of unintended consequences. We ask for you to vote ‘no.’ Thank you.”

Also joining in opposition were NAIOP and the Economic Development Association of Mesilla Valley, which stated that developers just aren’t going to use IRBs if this bill passes, taking away an important tool. Supporters were several labor unions that argued higher wages produce higher quality work and, overall, the net result is that project costs are not increased but workers are paid a “fairer” wage, whether they are union or not.

Other States, Higher Labor Costs

Our research indicates that both Colorado and Texas have state prevailing wage laws that are strictly limited to public works projects, normally things such as road construction paid for out of public funds. Arizona has no state prevailing wage law and uses the federal Davis-Bacon Act, which confines prevailing wages to public works.

On average, labor is about 25% of the total cost of a construction project. So, higher labor rates are significant in terms of total costs. The answer to whether prevailing wage rates raise costs depends on where you stand. Generally, proponents of HB 6 say any higher costs are offset by higher productivity. A leading source of information for the construction industry, Gordian, says that on federal projects, costs can increase by 12-20%. Industry says that productivity does not offset most or all of these higher costs. As we said in our testimony, and given the fact that our surrounding states do not require prevailing wages on IRB projects, it’s pretty easy to conclude that HB 6 will result in New Mexico being less competitive.

This may well explain why there is legislation proposing to increase oil taxes by nearly half a billion dollars. Yet, at the same time, there is legislation to enact “Medicaid Forward,” which would put virtually every New Mexican on Medicaid. We don’t know if the feds would approve this and, if they did, how much federal matching money would be available. In any event, it doesn’t seem like a good time to be adding Medicaid costs when we’re not sure that we can cover the current expenditures.

Medicaid’s Effects on Health Care

Since about 50% of New Mexicans are enrolled in Medicaid (and another 20% are on Medicare and 8% are uninsured), this means two out of three patients cause health care providers to either lose money (Medicaid) or maybe break even (Medicare) Our state nears the top of states in percentage of participation at about 50%. Most states are in the mid 20s – Texas is at 18.5%; Colorado at 28.4%, Utah at 13.8% and Arizona 30.5%. Why is this important? Because Medicaid doesn’t cover the full cost of providing service, much less allow for any profit. Medicaid reimbursement rates have been increased by the Legislature in the last few years, but it’s a constant game of catch up, trying to keep up with increasing costs of health care.

Private insurance, of course, pays much better – about 145% of the cost of care. So, if you’re a doctor, wouldn’t you rather practice in a state with a lower percentage of Medicaid patients and a much larger percentage of privately insured? Of course you would. You’d like to make more money to pay off those huge medical school debts, pay for state-of-the-art equipment and office staff. In New Mexico, it means that hospitals and health care providers have less money to hire employees and build facilities. The long-term goal should be to create more good-paying private-sector jobs and bring down the percentage of people on Medicaid, not increase enrollment. In the short term, we’ve got no choice but to try to find ways to keep the giant well-fed and asleep for as long as possible. (We’d like to acknowledge that some of the information used in this article comes from an excellent 25th anniversary report done by Think New Mexico.You can read the entire report which lays out solutions to the healthcare crisis HERE.)

Brandt explained that his bill “adds several crimes to our RICO statute to go after organized crime. The crimes that it adds are money laundering, sexual exploitation of children, criminal sexual penetration, criminal sexual conduct, dog fighting, bringing contraband to places of imprisonment, and human trafficking. All heinous crimes in themselves, and they need to be added to this. This allows our DAs to actually go after criminal organizations that engage in these activities and hopefully cut off the head of the snake and break those organizations up.”

Sen. Jim Townsend (R-Eddy & Otero) highlighted the importance of the bill’s changes. “One of the reasons that I was told by the DA is that it hasn’t been used in our state, is because it doesn’t cover the most heinous crimes that are being done today, like human trafficking. We have a huge increase in human trafficking in the state of New Mexico over the last four or five years, and if you’ll notice, every one of those recent cases have been charged by the feds because our RICO statute didn’t cover it. Our attorney general wanted to charge but couldn’t because our RICO statute didn’t cover it. Thank you, Sen. Brandt.”

Cockfighting was added back in to SB 70 as a crime that could be prosecuted as a RICO violation. Cockfighting had been removed in committee, but Rep. Jeff Steinborn’s (D-Doña Ana) floor amendment to restore it passed 30-6. Steinborn said, “cockfighting is absolutely, law enforcement will tell you, often involved in criminal activity, organized crime, in fact. And so this belongs on the list as well.”

SB 70 passed 30-0 and heads to the House next.

HAND IN THE COOKIE JAR? SENATE FLOOR GETS TOUGHER EMBEZZLEMENT PENALTIES

J.D. Bullington provided testimony in strong support of the bill, comparing it to a retail-theft bill that passed in 2023 and is effectively helping law enforcement lower the incidences of that crime. This particular bill will help law enforcement take a stronger stand when someone is caught with their hand in the cookie jar — stealing several cookies over a period of time.

“SB 155 would allow aggregating embezzlement charges over a consecutive 12-month period so that serial embezzlers could be punished with higher-level felony sentences. In a sense, this bill is similar to legislation passed in 2023 that allowed aggregation of retail-theft charges. And that new law is working.

“Whether it’s stealing a physical item or embezzling funds from a government, business or private account, it’s theft. And, this can include diverting equipment for personal use that was intended for government or business use. Unfortunately, in New Mexico we’ve seen embezzlement in some pretty high places, including law enforcement officials. Often, just like with retail theft, there are repeat offenders, and they would be targeted by this bill, potentially raising their penalty from a petty misdemeanor to different degrees of a felony. This makes good sense. It’s working on the retail-theft side, and we believe it will work with embezzlement.”

The Albuquerque Police Department has charged more 100 repeat offenders under the retail theft aggregation provision. According to APD Commander of Investigative Services Jeffery Barnard, “Year-to-date starting in November, we were down in shoplifting for the year overall. While it takes more time and work to get people on the felony charge, it’s worth it.”

SB 155 will give law enforcement an additional tool to go after people embezzling:

• Petty misdemeanors: when the value embezzled or converted is $250 or less in any consecutive 12-month period.
• Misdemeanor: more than $250 but not more than $500 in any consecutive 12-month period.
• Fourth-degree felony: more than $500 but not more than $2,500 or in any consecutive 12-month period.
• Third-degree felony: more than $2,500 but not more than $20,000 in any consecutive 12-month period.
• Second-degree felony: more than $20,000 in any consecutive 12-month period.

We’ll keep an eye out as this bill heads to the Senate floor. By consolidating multiple offenses into a single chargeable amount, the bill seeks to address repeat offenses and ensure appropriate sentencing based on cumulative financial harm.

FUNDING INCREASE CROSSES OVER TO HOUSE

The Public Regulation Commission has recommended increasing the cap for the broadband program from $30 million to $40 million to address the demand for broadband and stated, “the RTA’s $30 million cap is preventing the broadband program from being fully responsive to the urgent broadband access needs generated by the pandemic. Thus, the commission believes that the cap is temporarily interfering with the broadband program’s purposes.”

The Senate passed the bill to the House on a vote of 38-0. The Chamber is very supportive of SB 126 and acknowledges the tremendous leadership Padilla has and is providing on expanding broadband services in New Mexico.

Quality, affordable broadband service is very important to the economic health and development of our state. Of course, digital transactions rule the world, but let’s also not forget the opportunities it brings for distance learning, in class instruction and telehealth, to mention but a few of the benefits to both our economy and our quality of life. Now, let’s see, Netflix has a new series. …

The bill extensively amends the Delinquency Act to impose harsher provisions on minors who have committed certain criminal acts and to grant greater discretion to the court in extending probation or commitment.

Reeb introduced a committee substitute that defined serious youthful offenders and lowered the age from 15 to 14. It also added four crimes — murder in the first degree, voluntary manslaughter, robbery armed with a deadly weapon and shooting out of a dwelling or occupied building that results in great bodily harm to another person or shooting.

According to Bernalillo County data, in 2024 there was a total referral of 1,542 cases involving a juvenile defendant. Of those, 24 were for murder, 52 were for armed robbery and 73 were for shooting from a vehicle or at a dwelling.

Adrian Gomez of the Greater Albuquerque Chamber of Commerce testified in support of the bill, saying:

“Reform of the juvenile justice system is much needed and long overdue. Our state, tragically, has one of the highest youth homicide rates in the United States. Homicide ranks as the second leading cause of death among those aged 15–24, with firearms involved in 79% of cases.

With rising juvenile violence, we have to do better for the safety of our communities and the well-being of the youthful offenders themselves. Please vote ‘yes’ on HB 134.”

Also in support of the bill were the New Mexico State Police and New Mexico District Attorney Association.

Reeb said the bill is targeting the worst of the worst youthful offenders.

“We need to be reality-based about where we are right now in New Mexico and the violence that we’re dealing with,” Reeb said. “Reminding the committee that the majority of the crimes listed, they do get an amenability hearing. So if they are amenable to treatment, they will have that option. It’s just the serious violent offenders, the ones that are killing people, that may not have that option. So I would just say for too long, we’ve been kicking this can down the road. We’ve made promises to the people of New Mexico to take action on crime. And I believe now it’s time to deliver.”

After more than an hour of questions, a motion was made to table the committee substitute. The committee voted 4-2 along party lines to table the bill, Democrats in favor, Republicans opposed. After the vote, Rep. John Block (R-Otero) and Rep. Stefani Lord (R-Bernalillo & Torrance), both visibly frustrated, apologized to the sponsor and decried the inability of the Legislature to address juvenile crime in any meaningful way.

According to the Department of Health, “the proposed addition of respiratory care practitioners and polysomnographic technologists in SB424 could encourage health care practitioners to live and stay in rural and medically underserved areas to provide needed health care services.

Terri Cole, president and CEO of the Chamber, provided support for this measure in her testimony”

“Clearly, a theme of this session is to construct and improve the framework for attracting and retaining health care professionals to our state, especially in the rural areas. SB 424 contributes to that framework, and we urge you to vote yes today.

“As noted in the FIR, ‘there is a significant demand for medical care specialists like respiratory practitioners and polysomnographic technicians in rural areas.’ I even know what the word I can’t pronounce is – it’s sleep studies. The expansion of the $3,000 annual rural health care practitioner tax credit to these professionals comes at a very small cost to the general fund, yet it will do a lot of good. In the economic development field, health care is increasingly important. As is often said, it isn’t health care if you can’t get an appointment. Let’s help keep our professions in New Mexico.”

We’ll let you know what does, and doesn’t, make it into the final tax package.

BEHIND NATIONAL AVERAGES, AND SJR 15 WON’T HELP

We demonstrated this point by showing achievement levels for fourth- and eighth-grade reading from 1972 to 2015, a period overlapping both an elected state board of education and an appointed secretary of Public Education. And, unfortunately, New Mexico’s results were poor then, just as they are today. Here’s a look at that same period concerning fourth- and eighth-grade math competency:

We also presented information on the miraculous turn around in Mississippi due to a state law that required focus on teaching reading to the point of even holding students back at the third-grade level in order to give them the help they need to become proficient. Here’s the reality – you have to be able to read in order to learn. Right behind reading comes math – both are critical to overall academic achievement, leading to higher education or certification in various trades – no reading, no math, no success in life. We strongly support Soule’s Senate Bill 235 that focuses on improving math instruction. That’s on the right path and should be the focus of our attention, not tinkering with a governance system that doesn’t make a difference in student outcomes at the end of the day.

A really important bill, Senate Bill 70 sponsored by Sen. Craig Brandt (R-Sandoval), cleared the Senate without a dissenting vote. This bill expands the racketeering statute to include heinous sexual crimes and human trafficking, among others. Often cases are referred to federal prosecution because their RICO statute does include these kinds of crimes. However, their plate is pretty full, so we need a tool for our local law enforcement to use. Brandt has tenaciously pursued this legislation for two years, and we hope the House follows suit, quickly sending this bill to the governor.

Yesterday, tempting us during Lent, it was national cheese doodle day. It’s even worse today – it’s national Oreo and national cheesecake day. Get behind us, Satan. And we’re getting this day behind us, wishing you a very pleasant evening. We’ll see you tomorrow with more news and views.