Pub. 17 2020 Issue 2

Issue 2 • 2020 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 The governor enabled the use of $750 million from the federal CARES Act for revenue backfill. She also announced her decision to allocate funding from the federal legislation in order to provide $140 million for COVID-19 direct expenditures in the state, $150 million for city and county grants and $28 million for tribal government grants. As a backstop, HB 1 authorizes the Department of Finance and Administration to reduce state agency budgets an additional 2% if general fund revenues are insufficient. downturn by aggressively increasing reserves in recent years, which put us in a stronger position than most states to cope with the severe revenue shortfall we’re now experiencing. Governor Grisham did sign the state budget bill (HB 1) into law but used her line-item veto authority to delete more than $30 million in budget cuts and to restore funding that had been slated for reduction for public school support, culturally and linguistically relevant instructional materials and the Opportunity Scholarship Program. As noted, the revised budget for fiscal year 2021 totals $7.2 billion, down from the $7.6 billion plan approved in Feb- ruary. Overall, recurring general fund appropriations were reduced by roughly $415 million for fiscal year 2021; non-re- curring general fund appropriations were reduced by $102 million in fiscal year 2020 and $184 million in fiscal year 2021. State reserves in the new budget stand at 11.3%. The governor enabled the use of $750 million from the federal CARES Act for revenue backfill. She also announced her decision to allocate funding from the federal legislation in order to provide $140 million for COVID-19 direct ex- penditures in the state, $150 million for city and county grants and $28 million for tribal government grants. As a backstop, HB 1 authorizes the Department of Finance and Administration to reduce state agency budgets an addition- al 2% if general fund revenues are insufficient. Other Enacted Legislation: HB 5: New Mexico Civil Rights Commission: The legisla- tion created a nine-person New Mexico Civil Rights Com- mission. The governor appoints three members and the Legislature six. The commission will review existing policies and develop policy proposals for legislation for the creation of a civil right of action for the deprivation, by a public body or a person acting on behalf of or under the authority of a public body, of any right, privilege or immunity secured by the constitution of New Mexico. The commission will consider whether such right of action shall provide for monetary damages, including punitive damages and other equitable relief, including injunc- tive relief. The commission will review the use of qualified immunity as a defense to liability by an employee of a public body for a claim that would be brought either under federal or state law. The commission will cease to function on March 31st, 2021. HB 6: Tax Waivers and Distributions: The legislation provides temporary provisions to waive penalties and interest for tax liabilities related to (1) personal and corporate income taxes due between April 15th, 2020 and July 15th, 2020, (2) withholding taxes due between March 25th, 2020 and July 25th, 2020, (3) oil and gas proceeds and pass-through entity withholding taxes due between April 15th, 2020 and July 25th, 2020, (4) gross receipts and compensating taxes due between April 25th, 2020 and July 25th, 2020 and (5) man- aged audits performed between September 3rd, 2019 and January 3rd, 2020. The waiving of penalties and interest are intended to provide flexibility to taxpayers unable to make tax payments due to the outbreak of COVID-19. The bill doubles the temporary monthly distribution in FY21 to municipalities from $1.25 million to $2.5 million and to counties from $750 thousand to $1.5 million; each to be distributed to local governments in proportion to the popu- lation for each government based on the most recent federal decennial census. SB 3: Public Finance: The legislation embraces three issues: small business recovery loans, local government loans and unemployment compensation. • Small Business Recovery Act of 2020: SB 3 provides $400 million of permanent severance funding for a loan program that provides low-interest loans to qualifying small businesses impacted by business disruption resulting from the COVID-19 pandemic. The Act provides: ▪ The NM Finance Authority (NMFA), working with lenders, will administer the loan program; ▪ All forms of businesses including sole propri- etorships, partnerships, LLCs, corporations and certain nonprofit corporations are eligible to apply under the Act; n EXECUTIVE VICE PRESIDENT’S MESSAGE continued on page 6