Since January 2020, the New Mexico Legislature has been in session five times: the regular 30-day session in January 2020, the first special session in June 2020, the second special session in November 2020, the 60-day regular session that started Jan. 20, 2021, and the first special session in March 2021. Why so many sessions in a little over a year? The main culprit, both directly and indirectly, has most certainly been the COVID-19 pandemic. Even with so many legislative sessions as of late, more is on the horizon. It is anticipated that the Legislature will be called to a Special Session again in November to consider reappointment legislation.
Federal Funding
You may ask, how are my taxes being spent by Congress? Since the COVID-19 pandemic began in March 2020, Congress has allocated stimulus funding to states, tribes, local governments, individuals and businesses through stimulus legislation:
- The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020
- The Families First Coronavirus Response Act
- The Coronavirus Aid, Relief, and Economic Security (CARES) Act
- Paycheck Protection Program and Health Care Enhancement Act
- The Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, 2021
- American Rescue Plan (ARP) Act of 2021
When you combine all funding sources, stimulus legislation infused $19.1 billion worth of funds and services into New Mexico. Funds were in the form of direct payments to individuals, expanded unemployment benefits, paycheck protection program loans and other business supports, increased federal share of Medicaid costs, payments to health care providers, and FEMA support. Funding also included expanded resources for the state’s existing federal-funded programs and block grants (SNAP), the Substance Abuse Prevention and Treatment Block Grant, and the Child Care and Development Block Grant. Finally, three of the pieces of stimulus legislation provided general relief payments to state government, K-12 education, and higher education that could be used broadly for pandemic-related spending.
The 2020 CARES Act provided tribes, states, and larger local governments with allocations of coronavirus relief funds. New Mexico received $1.25 billion in coronavirus relief funds, of which $182 million was directed to the city of Albuquerque and Bernalillo County. The state Legislature allocated the remaining $1.07 billion of its coronavirus relief funds in the first 2020 Special Session:
- $750 million to the general fund
- $130 million for FY20 COVID-related state-emergency expenditures
- $188 million to tribes, pueblos, and localities.
The governor vetoed all but the $750 million allocation to the general fund. Still, she ended up allocating the remaining funding close to the Legislature’s plan — $178 million to tribes and local governments and $140 million for general fund expenditures.
In the 2020 second Special Session in November 2020, the Legislature further directed the use of those funds:
- $194 million to provide $1,200 payments to unemployed New Mexicans.
- $100 million for the New Mexico Finance Authority to provide grants to small businesses.
- $15 million for homeless housing support.
- $10 million to the Human Services Department for food banks and additional $750 payments to low-income households.
- The remaining $431 million was used for personnel costs for public health and safety employees.
The 2021 American Rescue Plan included $350 billion in COVID-19 relief aid to states, tribes and localities, of which New Mexico will receive $1.62 billion that can be used through the end of 2024. The Act stipulated allowable uses of relief funding to include:
- Assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality
- Premium pay to workers performing essential tasks during the pandemic
- Cover government revenue losses from the pandemic, or
- Investments in water, sewer, or broadband infrastructure
The Act also stipulated that the funds could not be used for state pensions, to offset a new tax cut, or to delay a tax increase. In addition to the state and local fiscal recovery funds, the Act included a $10 billion coronavirus capital projects fund available to states, territories and tribal governments for critical capital projects that directly enable work, education and health monitoring in response to the COVID-19 crisis. New Mexico is expected to receive $134 million of the capital fund, and the funding will remain available until it is expanded.
House members who were present in person participated by Zoom so that there was no disadvantage to members who were not physically present at the capitol.
The 2021 Regular Legislative Session Update
The 2021 Legislature adjourned at noon Saturday, March 20, having considered 252 House bills, 454 Senate bills, 60 Memorials and 37 constitutional amendments during the 60-day session. Only 158 bills passed this session, which is well under the average number of bills passed (356) in ten previous 60-day sessions. Of the 158 bills enacted in this year’s regular session, the governor signed 140 into law. She vetoed the other 18.
The regular session opened under the most unusual circumstances because of the COVID-19 pandemic. The state capitol was off-limits to the public and lobbyists for the entirety of the session. Only legislators, certain media members and legislative staffers were admitted to the capitol.
The governor’s annual State of the State speech, which historically marks the commencement of each legislative session, was not scheduled.
Most legislative committee meetings were conducted online. The Senate considered allowing members to participate in person in capitol hearing rooms, and the House Appropriations Committee met in person at the capitol. The House allowed representatives to participate in floor session debates and vote remotely. House members who were present in person participated by Zoom so that there was no disadvantage to members who are not physically present at the capitol. In the Senate, members were on the floor or utilizing Zoom from the capitol offices to participate in floor votes.
Public input for committee hearings was limited to emails or online options such as Zoom comments. It was feared that without the usual ongoing conversations among legislators, staff, lobbyists and state agency representatives, the legislation would not be as well-vetted and developed as in previous sessions.
Instead of her State of the State address, the governor submitted to the Legislature her priorities for 2021. The list included the following:
- Revise the Small Business Recovery Act of 2020. The Act, which was enacted in the June 2020 Special Session, contained a $400 million appropriation from the Severance Tax Permanent Fund. The legislation was enacted and signed by the governor.
- Reform the state’s Liquor Control Act to assist businesses such as restaurants. The reform provided for alcohol delivery and the purchase of dispenser licenses at a reasonable price. The legislation was approved and signed by the governor.
- Legalize adult use of cannabis. The legislation was approved in the March 2021 Special Session and signed by the governor.
- Reform predatory lending practices by limiting the annual interest rates on small loans. The legislation was not approved by the Legislature.
- Provide a 1% distribution of the state’s multibillion-dollar Land Grant Permanent Fund for early childhood education. The legislature approved the constitutional amendment.
- Create a clean fuel standard to reduce emissions that would include production, shipping and use. The legislation was not enacted.
There were a few legislative disappointments. For the second year in a row, the Legislature did not approve legislation to repeal the state income taxation on Social Security.
Overview
Overall, the NMBA had a successful 2021 legislative session. Most importantly, we were able to assist in defeating a proposal to create a state bank. We opposed a number of mortgage-related proposals that were defeated, as well as real and personal property proposals that included a homestead exemption increase and a real estate transfer tax.
There were a few legislative disappointments. For the second year in a row, the Legislature did not approve legislation to repeal the state income taxation on Social Security. Also, a mandate to provide a course for financial literacy in public schools was unsuccessful. We still have concerns with HB 255, the liquor license reform bill. We believe the bill did not provide adequate protection to existing licensees, and it may well impair the collateral banks hold for certain liquor license loans.
Bills Monitored by the NMBA (Enacted and Signed)
- Taxation relief for small business (SB 1)
- Small Business Recovery Act (SB 3)
- Housing Trust Fund funding (HB 2)
- Broadband (SB 93, HB 2, HB 10)
- Sustainable Economy Task Force (SB 112)
- Adjustable-rate mortgages (SB 365)
- LEDA project funding (HB 11)
- Liquor license reform (HB 255)
- Gross receipts tax deduction for manufacturing
- services (HB 278)
- Expansion of low-income comprehensive tax rebate and working families tax credit (HB 291)
- Workforce training residence requirements (HB 155)
- Early childhood education resolution (HJR 1)
- Air quality and hazardous waste regulations (SB 8)
Bills Monitored by the NMBA That Were Not Enacted
- Real estate transfer taxation (HB 19)
- Homestead exemption increase (HB 36)
- Private right of action allowed for certain environmental statutes (HB 50)
- Interest rate caps on small loans (HB 99, HB 149, SB 66)
- Minimum wage increase (HB 110)
- Public bank (HB 236, SB 313)
- Public education financial literacy course requirement (HB 302, SB 170, HB 163)
- Clean Fuel Standard Act (SB 11)
- Fracturing moratorium (SB 149)
- Financial Exploitation Act (SB 189)
- Mortgage Relief Act (SB 349)
- Repeal state taxation of Social Security (HB 49, SB 78, SB 162, SB 208)
The Special Session
Legislators ended the two-day 2021 Special Session on March 31. The Legislature considered and approved three substantive bills:
- SB 1 to expand the Local Economic Development
- Act (LEDA)
- HB 2 to legalize adult use of cannabis and
- SB 3 to expunge arrest and conviction records for certain cannabis offenses
The governor signed the three bills. The principal purpose given by the governor for calling a Special Session was to consider cannabis legalization proposals. The bill legislators ultimately approved, HB 2, decriminalizes the possession, use, production, transportation, and sale of commercial cannabis for nonmedical adult use and creates a regulatory and taxation structure. The bill enacts the Cannabis Regulation Act (CRA), a comprehensive plan for regulating and licensing commercial cannabis production and distribution, including the sale and consumption of cannabis by persons age 21 or older. A new Cannabis Control Division (CCD) created in the Regulation and Licensing Department is charged with regulating, administering, and collecting fees connected with commercial cannabis activity and licensing, the medical cannabis program, and providing cannabis education and training programs. The Department of Health’s authority under existing law related to commercial cannabis activity and the medical cannabis program is transferred to CCD. The new law will allow adults 21 and older to personally possess up to 2 ounces of cannabis, 16 grams of cannabis extract or 800 milligrams of edibles. Adults 21 and older can also grow up to six mature plants. Licensed sales will begin no later than April 2022, and the state will begin issuing business licenses by January 2022. The bill imposes an excise tax of 12% in addition to gross receipts tax. In 2025, the excise tax will increase from 12% to 18% over five years.
The 2021 Annual Convention
With summer just around the corner, the NMBA is in full swing preparing for our annual convention, scheduled August 25-27, 2021, in Orlando, Florida.
