HB8: APPROPRIATION FOR ECONOMIC DEVELOPMENT TRAINING (JTIP) sponsored by Speaker Lujan.  This bill appropriates $5 million from the general fund for in-plant and classroom training.  This is an ACI priority to support.

HB144: UNEMPLOYMENT COMPENSATION INCREASE sponsored by Rep. M. Stewart. 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. Under the current law, a portion of the contribution is earmarked for the State Unemployment Trust Fund. Under this bill, all of the contribution would flow to the Unemployment Compensation Fund. The balance in the State Unemployment Trust Fund is transferred to the Unemployment Compensation Fund and the statutory authority for the State Unemployment Fund (Section 51-1-19.1) is repealed.

ACI’s Work Place Issues Committee had a teleconference call with Secretary of Workforce Solutions(DWS), Ken Ortiz. Danny Jarrett, chair of our committee, summarizes nicely where we stand on this bill:

The bottom line is that if nothing is done the DWS 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.  Therefore ACI should consider supporting HB144 under the following conditions:

The bill includes language to roll back the UI benefit amount from 60% back down to 53.5%.  When this change was passed (Rep. Mimi Stewart’s bill), the argument was that we should do it because the fund was flush with money and we should pass some of that on to the beneficiaries of the fund.  Clearly that is no longer the case and the fund is in dire economic condition.  We recognize that taking benefits away from those receiving or entitled to receive unemployment would be a difficult sell.  One argument that can be used here is that increasing the unemployment tax will only further burden employers—thus leading to further job loss.

The bill as drafted proposed to freeze UI benefits at schedule 1 through 12/31/2011. We think we should force them to look at it again by modifying this end date of schedule 1 freeze and make it 12/31/2010 instead.  This would force reexamination of the issues at this time next year.

Today in Senate Corporations and Transportation Committee, a panel will present on “What is Good Tax Policy.”  The Committee meets after the floor session in Room 311.

Now the bad news:
Yesterday the House Taxation and Revenue Committee passed HB9: ONE PERCENT INCOME TAX SURTAX introduced by Rep. E. Sandoval. The bill was amended to add a one and ½ (1.5%) percent personal income tax surtax on married individuals filing separate returns with income over $100,000, on heads of household, surviving spouses and married individuals filing joint returns with income over $200,000 and on single individuals and estates with income over $133,000 for the 2010, 2011 and 2012 tax years.  The bill has one committee referral—the House Taxation & Revenue Committee that Rep. Sandoval chairs.  ACI will opposed this bill which now moves to the House Floor.

The Committee also passed HB119: FOUR-YEAR HIKE IN GROSS RECEIPTS, COMPENSATING TAXES introduced by Speaker Lujan 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. The bill grants a new tax credit to certain Medicaid dentists. The bill also restricts local governments’ authority to impose local option gross receipts taxes during the four-year period. The bill mandates that no new municipal or county local option gross receipts tax may be imposed during the four-year period if (1) the sum of the state tax increase in effect plus the total of all local option gross receipts taxes in effect exceeds 2.5 percent or (2) would exceed 2.5 percent with its imposition.  This bill also moves to the House Floor.

This morning, the House Health and Government Affairs Committee will hear HJR4: LEGISLATIVE AUTHORITY TO NULLIFY EXECUTIVE REGULATIONS Rep. A. Nunez. This is a priority that ACI will support.  This Joint Resolution proposes a constitutional amendment that would add a section that would allow the Legislature to nullify executive regulations or rules by passage of a joint legislative resolution. The amendment is subject to voter approval at the next general election.

Today, the House Business and Industry Committee will hear HB133: DISPOSABLE CARRY-OUT BAG TAX introduced by Rep. K. Giannini which would impose a five cent per bag tax on the manufacture in New Mexico or first purchase in New Mexico by businesses for distribution to customers of disposable carry-out bags.

A disposable carry-out bag is a bag of any material provided to a customer at check-out but excludes:
• bags used by customers to package bulk items (like fruits), contain or wrap frozen foods or flowers or contain unwrapped prepared foods or bakery items;
• bags used by pharmacists to contain certain prescription drugs;
• newspaper bags, door-hanger bags, laundry-dry cleaning bags or bags sold in packages containing multiple bags;
• paper carry-out bags provided by restaurants to customers; or
• reusable carry-out bags.

Reusable carry-out bags are bags with handles made of fabric or heavy-duty plastic at least 2.25 millimeters thick. No fiscal analysis has been completed for this proposal.  ACI will oppose this bill which has two committee referrals.

The Committee will also hear HB143: TAXES ON TAXES sponsored by Rep. M. Stewart. This bill requires personal income taxpayers who itemize their deductions to reduce the amount of itemized deductions for New Mexico purposes by the amount of state and local taxes included in the itemized deductions for federal purposes.  New Mexico currently allows the same itemized deductions as allowed for federal income tax purposes, including the deduction for state and local taxes. Deductible taxes include income taxes, property taxes and, under certain circumstances, sales taxes. This policy provides ease of compliance for taxpayers, but one consequence is a reduction in the effective income tax rate for households that itemize deductions. In general, households are more likely to itemize deductions the higher their income level. The Tax and Revenue Department’s analysis of 2007 federal tax return information indicates that roughly 70% of the increased liability under the proposal would could from households making more than $100,000 per year of gross income. Only 3% of the increase would come from households with less than $50,000 of gross income. ACI will oppose this bill which has two committee referrals.

Today in the House Energy and Natural Resources Committee the following bills will be heard:

HB27: RECOVERY OF DAMAGES TO NATURAL RESOURCES introduced by Rep. B. Egolf strengthens the Natural Resources Trustee Act by enhancing environmental protections for natural resources and, until January 1, 2015, authorizes the Natural Resources Trustee to pursue damages for joint and several liability on behalf of the state for damages that result from the release of injurious substances into the environment. Authorizes the use of funds from the Natural Resources Trustee Fund for restorative action outside the area of injury, if the trustee believes action within the area would be infeasible or ineffective.  The bill declares that the state's natural assets are held in trust for the benefit of the public and that their protection and preservation promotes the well-being of New Mexico citizens. Accordingly, the release of injurious substances into the environment constitutes a threat to the state's natural resources and an obligation for the state to recover damages for injuries to natural resources.  ACI opposes this bill which would make the regulations more strigent than the federal ones.  The bill has two committee recommendations.

HB78: GREENHOUSE GAS EMISSIONS RULES sponsored by Rep. R. Madalena would add a new section to the Air Quality Control Act authorizing the Environmental Improvement Board to adopt rules to quantify, verify and grant greenhouse gas early reduction and offset allowances to industry and to require reporting by importers of electricity and fuels whose production or use may cause emissions equivalent to 10,000 metric tons of carbon dioxide. The bill requires the board to ensure that gas reductions leading to these allowances are accurately measured, real, verifiable, voluntary, additional and permanent. The bill sets the effective date of the provisions at July 1, 2010.  The bill, in effect, would set emission standards that are different from those of the nation.  ACI believes that GHG emissions need to be addressed nationally and globally in order to be effective and to be fair.  ACI will oppose this bill which has two committee referrals.

The House Rules Committee will hear:

HB192: PURPORTED RESCISSION OF “PIT RULES” sponsored by Rep. T. Taylor would rescind the controversial “pit rules” adopted by the Oil Conservation Division of the Energy, Minerals and Natural Resources Department.  The rules are intended to prevent waste of oil or natural gas and contamination of ground water, however, the rules have no scientific basis and provide no environmental benefit. Since the implementation of the pit rules, drilling in New Mexico has decreased significantly and has had a negative impact on revenues and the state budget.  ACI will support this bill which will go to House Rules to determine if it is germane.

The House Judiciary Committee will hear:

HB180: WORKER ADJUSTMENT RETRAINING AND NOTIFICATION ACT Speaker Lujan has passed the House Labor & Human Resources Committee and now moves to the House Judiciary Committee.  The Worker Adjustment Retraining and Notification Act requires certain employers to provide advance notice at least 90 days before a mass layoff, a worksite closing or a sale or transfer of operation. Applies to employers of 75 or more full- and part-time employees and includes the parent corporation of a subsidiary that directly owns and operates a business. The bill authorizes the attorney general to pursue complaints. The bill states that notice must be given to each employee, representative of the employee, appropriate local Workforce Investment Boards established pursuant to the federal Workforce Investment Act of 1998 and the chief elected official of the unit of local government where the mass layoff, worksite closing or transfer of operations will occur. Employees who voluntarily leave the company during the notice period in anticipation of losing their job are counted toward all minimum numerical thresholds.

Notification must include the number of employees affected, the reasons, job opportunities at other operations of the employer and employee rights with respect to wages, severance pay, benefits, pension or other terms of employment that relate to a collective bargaining agreement or existing employer policies. An employer that violates provisions of the act is liable to each employee for 1) double back pay for each calendar day of the violation; 2) the value of benefits from the employers benefit plan during the notification, including the cost of medical expenses incurred that otherwise would have been covered; 3) other economic and exemplary damages that are proved by a preponderance of the evidence to have been caused by the employer’s violation of the provisions of the act; and 4) reasonable attorney fees and costs for employees who prevail in court.

The employer is also liable to the state or affected local governments for $500 per day for each calendar day of the violation multiplied by the number of employees who suffered an employment loss and $1,000 per day, according to the same formula, if the employer acted in bad faith through intentional, willful or reckless conduct.  ACI will oppose this bill.

Yesterday, we mistakenly blogged that House Business & Industry will hear HB9: ONE PERCENT INCOME TAX SURTAX introduced by Rep. E. Sandoval when in fact it will appear before the House Revenue and Taxation Committee.  The bill still has not been heard, so keep the calls and emails coming. This bill adds a one percent personal income tax surtax on married individuals filing separate returns with income over $100,000, on heads of household, surviving spouses and married individuals filing joint returns with income over $200,000 and on single individuals and estates with income over $133,000 for the 2010, 2011 and 2012 tax years.  ACI opposes this bill.

The House Business & Industry Committee voted unanimously to table HB35: HIKES CIGARETTE, TOBACCO PRODUCT TAXES introduced by Rep. B. Egolf that would increase the cigarette tax by a nickel per cigarette, or one dollar per pack and the tobacco products tax from 25 to 40 percent of the wholesale value of non-cigarette tobacco products.

The Committee passed on a 7-4 vote 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. The bill now moves to the House Taxation and Revenue Committee.

The Committee listened to debate on HB62: Mandatory Combined Tax Returns Rep. R. Begaye. No action was taken pending additional debate and possible amendments.  This bill would require almost all corporations operating in New Mexico that are members of a family of corporations engaging in a unitary business to file a combined return for New Mexico corporate income tax purposes. Manufacturers new to the state that have not filed previously a New Mexico corporate income tax return instead may file on a separate corporate entity basis. This bill repeals the existing option for corporate families to file on federal consolidated basis. ACI opposed this bill.