Pub. 16 2019 Issue 4

Issue 4 • 2019 5 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S n EXECUTIVE VICE PRESIDENT’S MESSAGE continued on page 6 posed constitutional amendments, which can be introduced in any legislative session, require only a majority vote in both chambers, and are not subject to approval or veto by the governor. Memorials and resolutions are also allowed in the 30-day session. In the governor’s second State of the State message, she out- lined her priorities for the session to include: • An overall general fund recurring budget of $7.68 billion, an 8.4% increase, with a 25% general fund reserve target; • A $74 million increase in early childhood services to establish an Early Childhood Education and Care De- partment overseeing the coordination and expansion of critical services; • A $200.3 million increase in the Public School’s budget for a total recurring budget of approximately $3.4 billion, including a second consecutive year of pay in- creases for educators and all school personnel. • Allocation of $35 million to fund New Mexico Opportu- nity Scholarships, which is expected to benefit 55,000 New Mexico students by making college tuition-free for New Mexico residents; • Critical investments in economic development and successes in diversifying and expanding the economy, including $200 million for roads, bridges and rail proj- ects throughout the state, building on last year’s appro- priation of $450 million for state and local road projects; $40 million to continue funding the Local Economic Development Act, $10 million of which will be used spe- cifically for rural infrastructure projects; $9 million for New Mexico’s Job Training Incentive Program; and $5 million to expand the New Mexico True campaign and continue to attract tourism to New Mexico; • A 3% salary increase for all state employees; a 2% salary increase for all higher education employees; and funding to fix the state pension shortfall. The Legislative Finance Committee (LFC), which prepares the initial annual legislative budget, is calling for $7.5 billion in ongoing spending, which represents 6.5% over current levels. Both the executive and the legislative branches propose an Ear- ly Childhood Trust Fund, substantial increases for education, and reserves of 25% of current spending. The principal differ - ence in budgets is that the LFC has not included a new college scholarship program ($35 million). Interestingly, the LFC’s rec- ommendation includes $150 million to assist the state’s pension plans, PERA and ERA. The governor has proposed $76 million for the PERA (public employees) and nothing for the ERA. In our view, one of the most important inclusions in the budget is an attempt to reduce drug costs. New Mexicans pay twice as much for brand-name drugs as Canadians. Under the governor’s plan, the Department of Health will create a new division of Wholesale Drug Importation. The division will develop, apply for, and negotiate with the federal government for approval of a Canadian wholesale drug importation plan that will ensure drug safety and significantly reduce the cost to New Mexicans. Great idea! The 2020 Legislature also has under consideration: • A red flag law that provides a temporary removal of a firearm from individuals who pose a threat to them - selves or others; • A Cannabis Regulation Act provides for the legalization of the recreational use and sale of cannabis to adults. Highlights of SB 115 (Ortiz y Pino) include: - Automatically expunging cannabis possession convictions. - Strong consumer protection and advertising rules; - Dedicating new revenue of funds to support public health education about cannabis, substance use disorder treatment, housing, job training and education programs statewide; - Eliminating the gross receipts tax for medical cannabis sales. • There are several bills pending that would repeal or revise the state income taxation on Social Security. HB 29 (Brown) and SB 81 (White) would repeal the tax entirely. HB 77 (Ely and Armstrong) would exempt the first $24,000 in Social Security income from tax and SB 68 (Padilla) would exempt the first $25,000. New Mexico is one of only 13 states that tax Social Security income. The NMBA Trust Committee has set this issue as its top priority. Federal Matters There are several proposed federal legislation and federal regulations that the NMBA is closely following: • ILLICIT CASH Act (S. 2563) which would strengthen anti-money-laundering efforts by cracking down on anonymous shell companies. The Legislature would establish a secure national database of beneficial own - ership information. A bank dedicates significant time and resources to collecting and recording information to determine a legal entity’s beneficial ownership — those who directly or indirectly own, control or benefit from a company. By law, this information must be updated and verified every time a new or existing business client opens an account, loan, or other ser- vices with all banks. Yet there are no official registries that collect the information, and banks can only rely on the information, they get from the customer. This loophole thwarts the efforts of many banks, which are working overtime to comply with anti-money laundering and anti-terrorism laws effectively. The Act would cure this by effectively streamlining the process of verifying and maintaining business owner- ship information in one central location. By requiring companies to register with FinCEN and to file updated reports when beneficial ownership changes, we will eliminate redundancies and create more transparency and uniformity around collecting beneficial ownership data across America. This would simplify the process for law enforcement by maintaining the information in a single federal database. The burden on business owners is minimal, as the legislation only requires disclosure of basic information needed from business- es to open a business bank account anyway. • SAFE Banking Act (S. 1200) would allow banks to provide services to legal, state-licensed cannabis com- panies and ancillary businesses without risk of federal prosecution. Thirty-three states have approved some form of retail marijuana sales, but federal law prevents financial institutions from providing financial services