On a 35-0 vote, the Senate just passed HB8: Appropriation for Economic Development Training (JTIP) sponsored by Speaker Lujan.  This bill appropriates $5.0 million from the General Fund to the Development Training Fund for providing in-plant and classroom training.

Last night, the House Taxation and Revenue Committee passed two very important bills.  The first, SB182: VOIDING AND REAUTHORIZING CAPITAL PROJECT EXPENDITURES sponsored by Sen. C. Cisneros is the bill also known as the Severance Tax claw back. This bill was vital to balancing the current year budget (FY2010 and restoring the reserves to 5%.  Without this bill, the state only had money for about 30 days, then would have to cut back to essential services mode only.

The second, SB112:  SEVERANCE TAX AND OTHER CAPITAL PROJECT BONDS sponsored by Sen. C. Cisneros contains Capital Outlay dollars for much-needed economic development projects including $2.5 million for Fidelity and $6 million for Hewlett Packard.

In the area of taxes, two things happened:

The House Business & Industry Committee tabled SB10:  FOOD TAX ON ACCESSORY FOOD ITEMS introduced by Sen. B. Sanchez narrows the gross receipts deduction for food purchases to the sales of staple foods at retail food stores. Staple food means a food or food product, including meat, poultry, fish, bread, cereal, vegetables, fruits or dairy products, for home consumption that meets the definition of staple food.  This is the bill the Senate was using to balance their budget proposal.

And the Senate Finance Committee pulled in HB119: FOUR-YEAR HIKE IN GROSS RECEIPTS, COMPENSATING TAXES introduced by Speaker Lujan. This bill raises the rates of both the gross receipts and compensating taxes from 5.0 percent to 5.50 percent for the period July 1, 2010 through June 30, 2011. Thereafter, the rates fall by one-eighth percent at the start of each fiscal year, once again reaching five percent on July 1, 2014. It is possible that this bill in some form will be heard on the Senate Floor prior to adjournment and used to balance the FY2011 budget.

The Senate did pass HB144: UNEMPLOYMENT COMPENSATION INCREASE Rep. M. Stewart on a 34-0 vote. This bill raises the unemployment compensation contribution by employers having a positive balance in their reserve account of at least one percent. The contribution increases by two-tenths percent of payroll for the period July 1, 2010 through December 31, 2011. The bottom line is that if nothing is done the Department of Workforce Solutions would be forced to take out a loan from the US Department of Labor.  As soon as that happens, and as repayment begins, the statutorily defined ratios vis-à-vis fund balance would dictate that we would move immediately from UI tax schedule 0 to schedule 6. (from $156 average contribution per employee to $528).  Needless to say, this would be a disaster for New Mexico businesses of all sizes. If the total fund amount is equal to three-tenths percent of the total payrolls in the state at any given time, the Secretary must implement schedule 6.  House Bill 144 does seem to be a good way to address the crises by spreading out the impact over time and avoiding crisis mode.