On January 21, 2020, the 30 day New Mexico legislative session begins. The 30-day session is referred to as the “short session” which are held in even number years while 60-day sessions occur in odd number years. Thirty-day sessions are limited to budgetary matters and issues approved for consideration and placed on what is referred to as the Governor’s call. Revenue bills, such as taxation, may also be considered during 30-day sessions. State lawmakers have already pre-filed nearly 90 bills ahead of the upcoming legislative session, but what actually gets put on the agenda is totally up to Governor Michelle Lujan Grisham.
This blog article is an in-depth report on the Governor’s 2020 legislative priorities.
On December 18, Governor Michelle Lujan Grisham announced in part what she referred to as an “ambitious” agenda for the 2020 legislative session. Among the legislation she intends to propose are bills calling for the legalization of recreational cannabis, parole reform and what she referred to as a “temporary gun seizure” law. The Governor has been meeting regularly with legislative leaders during the year and will continue to do so up and until the 2020 session begins on January 21, 2020.
On Friday, July 20, 2018, Santa Fe District Court Judge Sarah Singleton ruled that the state of New Mexico is violating the constitutional rights of at-risk students by failing to provide them with a sufficient education. The Judge found that it was clear that many New Mexico students are not receiving the basic education in reading, writing and math they should be receiving in our public-school system.
As a result of the State Court ruling, the 2019 legislature approved a whopping $3.2 Billion public education budget, a 16% increase over the previous year’s budget, out of the total state budget of $7 Billion. Included in the budget was a $500 million in additional funding for K-12 education and increases in teacher pay.
A major priority of Governor Lujan Grisham in the 2019 legislative session was the creation of a new “Early Childhood Department” starting in January 2020. Funding for the new Department is now a priority during the 2020 session. The new department will focus state resources on children from birth to 5 years of age. A major goal of the new department, coupled with other investments, will be more New Mexico children growing up to secure gainful employment as adults who don’t require government services.
On December 19, during a town hall meeting in Albuquerque with parents, teachers and others, and joined by her department heads for public education, higher education and early childhood education and care, the Governor outlined her education priorities for the 2020 legislative session. Three major legislative priorities include:
1. A new scholarship program called “Opportunity Scholarship” that would cover the cost of tuition for students enrolled at New Mexico colleges and universities. The scholarships are expected to cost $25 million to $35 million. The scholarships offered will be aimed at covering the remaining gap for students after other awards and scholarships, including New Mexico’s lottery program scholarships or other sources.
2. A new $300 million endowment fund that would help pay for early childhood education services. The endowment would increase state spending on prekindergarten, home visiting programs for new parents and other early childhood services. Lujan Grisham described the endowment proposal for early childhood programs as a “prudent way” to expand spending on prekindergarten and reach “universal pre-K” that prepares every child to start school.
3. Increased funding to help at-risk students and additional pay raises for educators in public schools.
THE LEGALIZATION OF RECREATIONAL CANNABIS
On March 7, 2019 the state House passed House Bill 356 (HB 356) with a two-vote majority of 36 to 34 that would have legalized the recreational use of marijuana. HB 356 bill included a provision for state run and regulated stores. House Bill 356 was a broad marijuana legalization proposal and dedicated some of the tax revenue from cannabis sales to research into cannabis impairment, purchasing roadside testing equipment for law enforcement and to train police officers as drug recognition experts when drivers are stopped. Every Republican Representative in the House voted against HB 356 joining 10 Democrats in opposition to it. The bipartisan proposal to allow cannabis sales at state-run shops narrowly cleared the state House but failed to make it through the Senate.
After the Legislature adjourned on March 21, 2019, Governor Michelle Lujan Grisham announced she would add the issue of legalizing recreational marijuana use to the 2020 legislative agenda. To that end, on June 28, 2019, Governor Michelle Lujan Grisham announced the creation of a “Cannabis Legalization Working Group.” The task force consisted of 19 members including the Democratic and Republican legislators who sponsored the unsuccessful legislation and included representatives of a labor unions, sheriff’s department, health care business, Native American tribes, medical cannabis businesses, a county government association, and commercial bank and hospital company.
On August 15, 2019, the Governor’s Cannabis Legalization Working Group was told by a consultant that if recreational marijuana is legalized in New Mexico, the state can expect out-of-state tourism and the reduced stigma and other factors to help fuel sales of recreational marijuana. It was reported that the demand for recreational marijuana and related cannabis products has far outpaced expectations in the State of Colorado since it was made legal. It was estimated the annual revenue for state and local governments could hit $120 million in five years, well beyond what legislative analysts estimated earlier this year. The market will also depend on the tax structure and the of regulatory decisions that will have to be implemented.
On September 10, 2019, the Governor’s task force endorsed and recommended a traditional licensing system for private companies that would grow and sell marijuana. The state would not operate retail stores. The licensing system is the same system as used for the State’s medical cannabis program. The proposal is a complete shift from the legislation that advanced through the state House last session where Democratic lawmakers embraced the idea of state-run cannabis stores as a part of a compromise with Republicans.
According to Governor Lujan Grisham, a recent poll showed 76% of New Mexicans are in favor of recreational marijuana. However, the poll does not mean lawmakers will be able to agree on a plan that best benefits New Mexico. In interviews, the Governor has acknowledged that winning approval of the marijuana legalization plan will be difficult. She believes the Senate will be the biggest hurdle and she had this to say:
“I think cannabis [recreational legalization] is going to be really hard [and] it should be. That is not something to run into without being really clear. … If I have it on the call, I’m serious about getting it passed”
PERA SOLVENCY MEASURES
The Public Education Retirement Association (PERA) is the legislative created and state regulated retirement association for all state, county and municipal government employees. PERA administers the pension funds for active, inactive, and retired public employees in New Mexico. PERA includes state, county and municipal plans, firefighters, police officers, blue collar workers and various municipal plans.
PERA pays pensions to more than 40,000 retirees and also has upwards of 50,000 active members who are working and paying into the system. PERA manages a $15 billion pension fund and income from fund investments helps pay pensions owed.
Over the last few years, it has been reported that PERA is in serious financial trouble because of long term liabilities of benefits to paid retirees in the future will exceed literally by the billions the funds that are available. PERA’s estimated unfunded liability, which is the gap between future retirement benefits owed and expected future assets on hand, has increased over the past four years from $4.6 billion to $6.6 billion in unfunded liability.
The PERA’s retirement system’s funded ratio, which is the plan’s assets divided by its liabilities, is now at 70%. The PERA governing board has set the goal to reach 100% funding of liabilities by the year 2043. The PERA pension system’s $6.6 billion in unfunded liabilities, or shortfall, has already damaged New Mexico’s credit rating.
For the 2020 legislative session, Governor Michelle Lujan Grisham has endorsed a complex proposal to overhaul New Mexico’s chronically underfunded PERA proposed by Democratic legislative leaders. The proposal builds on the work of a PERA task force established by the governor with some major changes. The most controversial recommendations by her task force involved the 2% cost of living (COLA) currently guaranteed to all retirees.
According to media reports, the legislation will establish a “profit-sharing” model for the annual cost-of-living adjustments that most retirees now receive. Rather than an automatic 2% increase in their pensions each year, the actual amount would fluctuate, anywhere from 0.5% to 3%, depending on investment returns.
Under the proposed legislation, government employers and employees will pay more into the system with a schedule that phases in higher contributions. Other changes will help retirees who are older than 75, disabled or receiving pensions of less than $25,000 a year, despite 25 years of service.
With respect to annual cost-of-living adjustments, they would be increased by half a percentage point to 2.5% for retirees who are 75 or older. This was a change made after requested by Governor Lujan Grisham.
Under the proposed legislation, many retirees would receive a temporary reduction in their cost-of-living increases. For 3 years, retirees would get an extra check equal to 2% of their pension. Such a “one lump” sum payment in one check would eliminate the compounding effect of having each 2% build on the previous 2% increase.
The PERA reform legislation also calls for injecting $76 million in state funding into the system to cover the cost of the extra checks. According to PERA officials and legislative finance analysts, the net effect would be an immediate $700 million reduction in the pension system’s unfunded liability.
The retirement system’s funded ratio is now about 70% and the legislative changes are aimed at wiping out the liability within 25 years resulting in 100% funding of future liabilities.
In her proposed 2020-2021 budget Governor Michelle Lujan Grisham is expected to ask for enough funding for 60 additional New Mexico State Police Officers. Such an increase in personnel will give the governor the option to do more with the “Fugitive Apprehension Unit” as well as to conduct law enforcement surges as was done in Albuquerque.
There are more than 660 State Police officers across New Mexico. Right now, only about 60 of them are stationed in the Albuquerque area district, which covers 6 counties. On December 18, Albuquerque Republican State Senator Sander Rue went on record saying he wants the New Mexico State Police to have a larger presence in Albuquerque for at least a year to help the understaffed Albuquerque Police Department (APD) tackle crime. Senator Rue wants 30 more State Police officers in Albuquerque as early as next summer. Legislation he is advocating would increase that number up to 90, with at least 30 of them designated to only Albuquerque.
On May 10, the Governor announced she was assigning 50 New Mexico State Police officers from across the state to work in Albuquerque to conduct a law enforcement surge to help combat violent crime. The surge lasted approximately 3 weeks and resulted in 738 arrests for felony or misdemeanor warrants. Based on the number of arrests, the surge was a success.
However, most of the cases involving the State Police were dismissed but many can still be refilled by prosecutors. An analysis found that 52% of the cases were dismissed for a variety of reasons, including deficient paperwork or a lack of evidence. A number of the cases were dismissed because state police officers did not show up to scheduled court hearings. Many of the State Police officers were not assigned to Albuquerque permanently had had to return to their assignments in other communities, which explains their failure to appear at scheduled proceedings.
Two NM State Police Officers were involved with shootings during the surge that resulted in severe criticism by the American Civil Liberties Union (ACLU) and APD civilian oversight groups that the New Mexico State Police were not following the mandates or reforms of the Court Approved Settlement (CASA), including not firing their guns at fleeing cars, which is what happened with one of the cases. The blunt truth is that the New Mexico State Police as well as the Bernalillo County Sheriff’s office are not under any obligation to follow the CASA mandates.
On October 30, in part because of the success of the New Mexico State Police surge in Albuquerque, Governor Michelle Lujan Grisham order the creation of the “Fugitive Apprehension Unit” to apprehend hundreds of criminal defendants across New Mexico who have not shown up for court hearings or wanted on bench warrants. The Fugitive Apprehension Unit consists of State Police officers and state Corrections Department staffers. The unit works with local law enforcement officials around New Mexico to track down and arrest people charged with committing violent crimes.
GIVING A HELPING HAND TO MAYOR TIM KELLER
On December 2, Albuquerque Mayor Tim Keller revealed his legislative priorities for the upcoming 2020 New Mexico Legislative session that starts in January. Keller said his top priority will again be public safety. His requests include $10 million for his violence intervention programs and $20 million for modernizing crime fighting technology and to “modernize” APD’s data reporting system. Keller said $20 million dollars will go to changing the way police file reports and produce crime stats and how they connect all the crime-fighting data into one.
Keller’s request in funding was made within days after is was revealed the Keller Administration released statistics and crime rates that were seriously flawed and inflated showing dramatic reductions in crime not at all accurate. The crime rate fiasco was attributed to antiquated data collection systems. In a Channel 7 interview the Governor signaled her support of Mayor Keller’s request for the funding in the 2020 legislative session and said:
“I want the mayor to be unabashed. He needs to have the tools and the resources, and we all need to be accountable.”
You can review related news reports here:
“RED FLAG” LEGISLATION
Throughout all her years as a congresswoman for the First Congressional District, Michelle Lujan Grisham was a strong advocate for gun control measures on the federal level and she continues to do so as Governor on the state level.
On March 8, 2019, Governor Michelle Lujan Grisham signed into law Senate Bill 8 (SB-8) enacted by the 2019 Legislature which requires background checks for guns sold privately and at gun shows. Debate on the legislation was hot and heavy, but SB 8 passed the Senate on a 22-20 vote and passed the House 42-27 vote. The Governor signed the legislation and it became law effective July 1, 2019. Governor Michelle Lujan Grisham also signed Senate Bill 328 which prohibits gun possession by someone who’s subject to an order of protection under the Family Violence Protection Act which prohibits the possession of firearms by domestic abusers.
Elected County Sheriffs repeatedly spoke out against the gun legislation during legislative committee hearings. Some elected sheriffs testified that they simply would not enforce the legislation if it became law. Twenty-eight of New Mexico’s counties as well as a few municipalities in the state have passed “Second Amendment Sanctuary” ordinances in defiance to the enacted legislative gun control measures. Things got so bad that Attorney General Hector Balderas sent a strongly worded letter to all the elected Sheriff’s reminding them of their legal obligation to enforce the laws regardless of whether they agree with the legislation and saying:
“As law enforcement officials we do not have the freedom to pick and choose which state laws we enforce. … In short, the taxpayers of your city or county assume the financial risk of your decision to impose your personal views over the law. … [Discretion] cannot subvert the rule of law. All New Mexicans, including public [law enforcement] officials, are equally subject to the law.”
During the 2019 session, a red flag bill sponsored by Democratic Representative Damon Ely past the house but failed in the Senate. The bill was one of the more controversial bills causing New Mexico Sheriffs around the state to lobby heavily against it. After the 2019 session, the Governor signaled that she would place another “red flag” law on the 2020 call. You can expect the same opposition from law enforcement. Any proposed “red-flag” law would allow courts to order the temporary taking of firearms from individuals deemed to be a threat to themselves or others.
Lujan Grisham has said a “red flag” law will make communities safer and for that reason she has attempted to work with the Sheriff’s to reach a compromise, but has been unable to win support for a “red flag” law. The New Mexico Sheriffs Association opposes “red flag” laws believing they are ineffective and that they infringe on Second Amendment constitutional rights to bear arms. Sheriffs are elected officials just like the Governor, and as such the Governor has little control over how they should approach law enforcement.
For a related blog article see:
INCREASING FIRE ARM ENHANCEMENT PENALTIES
Republican State Representative William “Bill” Rehm has pre-filed House Bill 35, a measure that would enhance the penalty for using a firearm in the commission of a crime from 1 to 3 years. The governor said she supports proposed legislation, but the question remains if it will even make it through the Democratic controlled legislature which traditionally has difficulty in enacting firearm enhancement penalties.
NO TAX CODE REFORM ON GOVERNOR’S CALL
Absent from the Governor’s call is legislation dealing with overhauling New Mexico’s tax code system. The Governor is signaling that tax overhaul will have to wait until the 2021 session in order to give a state tax advisory committee more time to study potential changes. The Governor made it clear she does not plan to include legislation exempting Social Security income from taxation and no legislation that would make changes to the state’s gross receipts tax code. In particular, the Governor has said no to House Speaker Brian Egolf’s legislation aimed at shaving half a percentage point off New Mexico’s gross receipts tax rate, a bipartisan bill that he was hoping to have ready for the 2020 legislative session.
STATE REVENUE SURGE
According to news reports state revenue collections are roughly $273 million above projected levels, and will in all likely be even higher, due primarily to skyrocketing oil production in southeastern New Mexico that has led to a regional economic upswing. Royalties, taxes and other direct revenue from oil and natural gas production now make up more than 35% of all revenue collected by New Mexico.
The higher-than-expected revenue surge has the state on track to collect an unprecedented $7.8 billion in the budget year that ended June 30. Such revenues could allow for additional spending increases on public schools, roads, shoring up the PERA pension funds and other state programs in the upcoming 2020 legislative session.
New Mexico was already expecting a $1.3 billion budget surplus for the fiscal year. However, a Legislative Finance Committee revenue tracking report suggests that the final surplus figure will likely end up being larger. Most of the revenue windfall is due to an oil boom in the Permian Basin that has been driven by improvement in drilling techniques and production methods and has made New Mexico the nation’s third-highest oil producing state.
COMMENTARY AND ANALYSIS
The 2020 New Mexico Legislative session will be Governor Michelle Lujan Grisham’s second legislative session, but she has been through sessions before as a cabinet secretary, knows the drill and knows how to count votes. The 2019 legislative session accomplishments will be a very difficult act to follow, especially during a 30-day short session. (See postscript below on 2019 legislative session). Notwithstanding, Governor Michelle Lujan Grisham has indeed announced an ambitious agenda that is still very much evolving and that no doubt will include much more.
The three most controversial legislative priorities that without a doubt are the most controversial are PERA reforms, legalization of recreational marijuana, and gun control measures in the form of “red flag” laws. Any one of the 3 measures could have serious political repercussions that will affect her popularity among voters and even alienate some of her core supporters.
PERA SOLVENCY MEASURES
PERA Governing Board meetings held during the general election race for Governor were packed with standing room only by very angry and very upset PERA retirees demanding explanations and information on the solvency of PERA pension system which was being reported as failing. Audiences were extremely diverse, and retirees vote. The audiences were at times confrontational with the PERA Board members. Accusations of mismanagement of the funds were also made.
During her campaign, candidate for Governor Michelle Lujan Grisham said she would oppose cuts to benefits, including any reduction in the annual inflation-related pension adjustments that retired state workers and teachers receive. According to a campaign spokesperson at the time:
“She does not believe that New Mexico needs to eliminate our defined benefit system for current or future educators and state employees and opposes any reduction in cost-of-living adjustments.”
The PERA solvency plan the Governor supports runs a significant risk of alienating some of her strongest supporters that could signal trouble for her in three years when see seeks a second term. Governor Lujan Grisham received a significant number of union endorsements and campaign donations especially from state government unions such as AFSME. The PERA solvency changes could very well “poke the bear” of 90,000 PERA contributors, retirees and their family members.
The PERA governing board has set the goal to reach 100% funding of liabilities by the year 2043 declaring there is a PERA pension fund “crisis”. The truth is, there is no crisis. The PERA pensions funds have always operated in the red, with investments ebbing and flowing to pay retirement benefits as they incur. It is the funds financial advisors who want a 100% funded program, no doubt motivated by getting their hands on more money to invest and getting hirer investment fees.
The New Mexico PERA pension program has 70% of funded liability in current funding assets to future liability making it one of the strongest pension programs in the country. The two major pension funds that are currently problematic are shortfalls of 7.99% of State General pensions and 13.87% for Municipal Fire Pension programs. Contribution shortfalls of State General and Municipal Fire are up and until 2066. PERA management has failed to articulate in clear terms all the options available to insure PERA will reach a 100% funding ratio by 2043.
Notwithstanding, PERA Pension reform must again be undertaken. The difference is the New Mexico Legislature has time to address the PERA pension system and the sky is not falling. The legislature can make adjustments like increasing age of retirements, change the formula to calculate retirement, make increases in contributions and infuse state funding into the pension funds, but only those that are underfunded which currently the municipal fire fighters fund and the general worker fund. Better management of the pension funds and increasing returns on investment are always relied upon to pay for benefits. At a minimum, the PERA Pension plans are solvent for at least 23, if not more years.
New Mexico has some of the highest DWI rates in the country and ranks #1 in heroin overdose deaths with the state having a serious opioid crisis. Legalizing recreational marijuana has the danger of contributing to the State’s high alcohol and drug addiction rates, a legacy no Governor wants to be remembered for after they leave office. Notwithstanding, a recent poll shows 76% of New Mexicans are in favor of legalizing recreational marijuana. Further, any recreational marijuana law needs to ensure that the states highly successful medical marijuana program is not placed in jeopardy.
When it comes to the legalization of the recreational use of marijuana, the legislature needs to avoid a traditional licensing system like it created for full-service alcohol licenses. With present alcohol full-service licenses, the number of licenses is capped and based on population numbers. Liquor licenses are now being sold for upwards of $1.5 million where only the wealthy or major restaurant chains can only afford them.
The result and unintended consequence will be identical with recreational marijuana licenses purchased for a few thousand dollars from the state and held onto as an investment and for a windfall profit. The exact same thing will happen with recreational marijuana licenses unless the licenses are not tied to population. There should be no limit on the number of recreational pot licenses that will create a market of licenses that increase value and are considered an investment by the private sector as opposed to regulation by the state to protect the public health safety and welfare.
“RED FLAG LAW”
There are 33 elected county sheriffs in the state of New Mexico. There is also a Sheriff’s Association. One group of elected officials no Governor wants to offend and who any Governor has to work with are the elected Sheriffs, with each one having their own agencies, law enforcement philosophy to address their communities law enforcement needs. The “universal background” check legislation enacted last year resulted in a severe backlash with many elected Sheriff’s and County Commission’s declaring they would not enforce the law or declaring their counties “2nd Amendment Sanctuary Counties.” The law also resulted in a lawsuit filed by Republican lawmakers that is still pending. This is one piece of legislation that perhaps should be placed on hold until 2021 to allow gun control measures such as background checks to be fully implemented by the Sheriffs and who no doubt will need funding for the new programs.
For a related blog article see:
One thing is for certain, the governor’s job of promoting her programs during the 2020 legislative session will be made much easier because of the oil boom that has propelled New Mexico’s government revenue to record highs with debate now over how to spend the windfall. The surplus should allow the Governor to virtually fund all the education programs she wants, invest in capital projects and infrastructure as well as shore up the PERA pension funds, but only if the legislature allows her. Another major source of revenue for the state would be the legalization of the recreational use of marijuana, if done properly, with responsible regulation and taxation.
Before the commencement of the 2020 legislative session, Governor Michelle Lujan Grisham needs to exercise great caution with the 3 issues of PERA Solvency, recreational marijuana and a red flag Law. The Governor should not expend precious political capital on legislation that is doomed for failure in either the New Mexico House or Senate. It’s a simple issue of math, securing a majority consensus and counting votes. She should not put anything on her call during a 30-day session that she knows will fail. Too much is at stake on all three issues that has the potential of alienating many of her base supporters and resulting in nothing getting accomplished and causing more damage than good.
There is always the 2021 sixty-day session and for that matter, special sessions to deal with major issues.
2019 NM LEGISLATURE REMEMBERED
By most accounts, the 2019 legislative session was one of the most productive sessions in recent memory. The legislature and the Governor came together and were able to get things done. Absent from the 2019 session was the acrimony and confrontation created by the former, two term, Republican Governor “She Who Must Not Be Named”. Those accomplishments include:
Enacting a $7 billion plus state budget, the largest budget ever enacted in state history.
Enacting a $3.2 Billion education budget including additional funding for K-12 education and increases in teacher pay.
Enactment of tax hikes in over a decade that raised a combined $70 million for the state’s general fund through a personal income tax rate hike for the state’s higher earners, internet consumer sales and vehicle sales. The previous Republican Governor’s refusal to raise taxes resulted in sever cuts in government personnel and a reduction in government essential services.
Creating a new “Early Childhood Department”, raising the state’s minimum wage from $7.50 an hour in increments and will rise to $12 an hour in 2022.
Shore up New Mexico’s two major pension funds by increasing how much the state pays into workers’ retirement accounts with an approximate amount of $13.7 million.
Creation of the Ethics Commission.
Enactment of nearly universal background checks for all gun sales.
Creating a new, independent ethics commission setting powers and procedures of the commission.
Enacting legislation to allow expungement of criminal records where defendants are allowed to seek court approved orders to expunge or “wipe out” an arrest or a conviction from their records.
Increasing the film tax credit cap from $50 million to $110 million.
Overhauling campaign finance regulations and require more disclosure from those who make “independent expenditures” in political campaigns. A measure was also passed that closed a loophole that exempted lobbyist spending from public disclosure. Lobbyists will be required to report their cumulative spending on individuals’ meals or entertainment items that cost less than $100.
Enactment of the “Energy Transition Act”, a renewable energy bill, was enacted by the 2019 New Mexico Legislature. The legislation requires that 80% of the state’s power from large utilities must come from “renewable energy” sources by the year 2040 and be 100% carbon free by 2045.
Decriminalization of the possession of small amounts of marijuana.
The state “two-tiered driver’s license system” created by the previous Republican Governor’s Administration was amended to make it easier for undocumented workers to get drivers’ licenses.
Same day voter registration and automatic voter registration when getting a drivers’ license.
For a full analysis on 2019 session see:
It’s Called Governing: More Consequential Legislation Enacted In 60 Days Than In 8 Years