Governor Lujan Grisham has called for up to $475 million to be spent on single time pandemic relief measures during this year’s 60-day legislative session that started on January 19. The Governor did not tell lawmakers what specific programs should be funded leaving that up to them.
Legislation is progressing through committee hearings in the 2021 Legislative session that will have a direct impact on New Mexico’s service industry and employees. Two are Pandemic Relief funding and one is paid sick leave.
PANDEMIC RELIEF FUNDING
On Thursday, February 4, the State Senate Finance committee approved two separate pandemic relief bills on a unanimous vote with no dissent. Senate Bill One (SB-1) bill calls for $600 rebates for New Mexico workers who make less than $15 per hour. It also calls for a 4-month tax suspension for restaurants, breweries, dining establishments, including food trucks.
REBATES TO ESSENTIAL WORKERS
In the June and November Special Legislative session held in 2020,the New Mexico lawmakers passed two separate pandemic relief packages. The November relief package was objected to by many legislators because it did not include hazard-pay bonuses to “essential” workers making less than $15 an hour. These are workers who have been at the front lines of the pandemic working at grocery stores, hospitals and other businesses.
According to Senate Majority Leader Peter Wirth, D-Santa Fe, such workers will benefit from the$600 rebates in that it targets New Mexicans who qualified for the state’s Working Families Tax Credit in 2020. Wirth told the Senate Finance Committee:
“These are the essential workers that have been holding our economy together and deserve our thanks.”
RESTAURANT TAX RELIEF
Under the Senate Bill approved by the Senate Finance committee, a “tax holiday” for restaurant and brewery sales was approved to in effect from March through June. According to the legislation, sales made during the 4-month time period would allow to be deducted from gross receipts tax and the state would offset any revenue loss incurred by New Mexico cities and counties as a result.
Sen. Crystal Diamond, R-Elephant Butt, told the Senate Committee that while tax relief could help keep some struggling restaurants afloat, allowing restaurants and bars to reopen with relaxed capacity limits would have a much bigger impact in keeping such establishments from permanently shuttering. At this point, the tax relief is already too late for many restaurants that have already closed.
WAIVER OF LIQUOR LICENSING FEES
The Senate Finance committee endorsed a separate bill that directed the New Mexico Regulation and Licensing, Alcohol and Gaming Division to temporarily waive the fees for liquor licenses. All bars in New Mexico had to pay liquor license fees last year, despite being closed for most of the year due to public health orders issued by Governor Lujan Grisham.
The pandemic and the Governor’s mandatory closures and limited occupancy restrictions for indoor and outdoor dining to slow the spread of the virus has had a dramatic impact. Some supporters are saying that upwards of 30% of businesses closed will never reopen again and have gone out of business.
The state Taxation and Revenue Department said taxable gross receipts from New Mexico’s hospitality and food industries are down 21.8% or by more than $445 million over the 2019 year’s levels through the first five months of the current budget year.
WHERE THE FUNDING WILL COME FROM
The relief package is an estimated $185 million for the rebates and restaurant tax breaks alone. The financing will come from the state’s cash reserves. The states cash reserves are upwards of $2.5 billion, which is 35% of the state’s overall spending.
Senate Bill 1 will be scheduled for debate and a final vote by the Senate during the week of February 8. The goal is to get the recovery package to the Governor by the end of the month to be signed into law. The bills will take effect immediately upon being signed if they pass both legislative chambers with at least a two-thirds majority vote.
MANDATORY PAID SICK LEAVE LEGISLATION
House Bill 20 is legislation that would require New Mexico employers to offer paid sick leave to their workforce. On Thursday February 4, the bill passed the House Labor, Veterans and Military Affairs Committee on 5 to 3 vote. Democrats voted YES in favor and Republicans voting NO Before the vote, the sick leave bill was amended to incorporate ideas from a competing bill.
Under House Bill 20, employees would accrue at least 1 hour of paid leave for every 30 hours worked. Employees could use up to 64 hours of earned leave in a 12 month period, unless the employer offers a higher limit. The sick leave accrual would apply regardless of the size of the business.
The sick leave proposal includes a provision for supplemental leave during a public health emergency, expanding what’s otherwise called for in the law. Under the legislation, employees could use sick leave accrued for medical care, caring for a family member or for absences related to domestic abuse, sexual assault or stalking.
Employers who violate the act would be liable for three times the wages they should have paid the employee, or $1,000, whichever is greater.
Sponsors of the bill are Democratic Representatives . Christine Chandler of Los Alamos and Angelica Rubio of Las Cruces. Both representatives told the House committee the sick leave proposal will help protect employers and employees alike, by limiting the chances for illness to spread within a workplace. Rubio for his part told the committee:
“This is the one thing that workers need right now, particularly because of what they’re exposed to on the front lines.”
OLÉ New Mexico has been a major advocate of paid sick leave the last 4 years in Albuquerque and Bernalillo County, advocating both the city and county governments to enact such legislation and placing the measures on the ballot where it has failed. Eric Shimamoto, a member of OLÉ New Mexico told the house committee:
“If this pandemic has taught us anything, it’s that staying home when you’re sick is taking care of everyone.”
OPPOSITION TO SICK LEAVE ORDIANCE
The paid sick leave legislation drew aggressive opposition from business owners and business groups. They argued forcefully that the amended bill did not address concerns about the cost and paperwork burden on small businesses. Terri Cole, president and CEO of the Greater Albuquerque Chamber of Commerce had this to say in an interview with the Albuquerque Journal after the house committee hearing:
“We provided the committee with several reasonable ways to limit the financial impact this onerous mandatory leave bill will otherwise have on small businesses and their workers. While this one committee chose to ignore the input of the business community, we can’t imagine the governor, House leaders, and Senate leaders share the belief that small businesses shouldn’t be accommodated and included in the conversation.”
The link to the Albuquerque Journal article is here:
The paid sick leave Bill 20 has been referred to the House Judiciary Committee, for yet another committee hearing where it could pass, voted down or be tabled. If the bill passes the House Judiciary Committee is will then be forwarded to the full House Chamber for consideration and if it passes there, it will be forwarded to the State Senate for further committee hearings.
COMMENTARY AND ANALYSIS
The pandemic relief bills can not be enacted soon enough and signed by the Governor. The state’s reserve fund of $2.5 billion is being used for what is it intended to be used for: economic and financial crises. The relief was needed yesterday.
As for the sick leave legislation, its goals and objective are worthy of support, but the timing of the enactment could not come at a worse time. Mandatory pay of sick leave is a hard sell given the fact unemployment applications are at historical highs in New Mexico and so many businesses in the service industry have closed down, and probably permanently. Forcing mandatory payment of sick leave is difficult to justify during a pandemic and with so many business closures and even the 25% customer occupancy rules in place.