On March 18, 2022, Governor Michelle Lujan Grisham and the New Mexico legislative leadership announced that the New Mexico Legislature will be called into a special session to take up measures of economic relief and take up a revised supplemental “junior” spending bill for capital investments. The governor and legislative leadership worked on and agreed to parameters for a revised spending bill, including ensuring that projects are appropriately budgeted as recurring or non-recurring funding. As it stands, the agenda includes just two items:
1. Economic relief to blunt the increased price of gas and
2. A $50 million supplemental spending package.
The Special Session is scheduled to begin on April 5 and will likely be a two day session.
SIZE AND SCOPE OF TAX REBATE STILL BEING DECIDED
The governor and lawmakers approved an $8.5 billion budget during the 2022 legislative session that ended on February 17. As the nation’s No. 2 oil producer, New Mexico is enjoying a revenue boom, with reserves projected at roughly 29% of annual spending, or around $2.5 billion. The exact way on how to spend the extra money flowing into state coffers, or to place it in reserves for future use, is at the center of debate.
During the 2022 legislative session, a round of tax rebates pasted. The rebates are set to be distributed soon after July 1, the beginning of the fiscal year. The approved legislation calls for a $250 rebate for adults who make less than $75,000 annually, or $500 for married couples filing jointly who make less than $150,000.
Tax rebates have emerged as the likely strategy to help New Mexicans afford gas prices that now exceed $4 a gallon. According to AAA, the average price of regular-grade gasoline in New Mexico is up to $4.140, a 19% jump over a month ago and a whopping 44% increase over a year ago.
It is reported that Legislators are discussing rebate checks of $250 to $400 per tax filer, or double that for couples filing jointly. This is a significant increase over what lawmakers were considering earlier which was $110 to $160 per taxpayer. The precise size, scope and timing of the rebate checks, including whether to impose an income limit on those eligible, are still under discussion.
On March 23, Senate Finance Committee Chairman George Muñoz, D-Gallup, said that he is preparing a proposal for rebates of $300 per individual, or $600 for a couple filing jointly. He estimated it would cost the state about $455 million. The checks, Muñoz said, should go out as soon as the legislation is signed into law. Munoz said:
“Now’s the time. … People are planning summer trips.”
Democratic Representative Christine Chandler of Los Alamos, chairwoman of the House Taxation and Revenue Committee said she favors sending checks to every taxpayer rather than imposing an income requirement on the next round of checks. she cautioned that the contents of the proposal are still a matter of debate and she had this to say:
“The focus of the rebates is to soften the blow of high gas prices and some other inflationary things going on right now. … That pretty much applies to everyone across the board.”
High gas prices and strong government revenue have triggered debates in state capitals across the country. In California, Gov. Gavin Newsom has proposed debit cards of $400 or $800 to help vehicle owners with gas prices. Alaska, by contrast, issues dividends each year to full-time residents based on the investment earnings on mineral royalties – resulting in dividends of $1,114 per person last year.
“JUNIOR” SPENDING BILL
On March 9 was the deadline for Governor Michell Lujan Grisham to sign into law, or to veto legislation enacted by the 2022 New Mexico 30-day legislative session that ended on February 17. The Governor announced that she vetoed SENATE BILL 48, known as the Junior Bill, that would have spent a little over $50 million in state projects. Supplemental spending bills, called “junior” budget bills, usually surface in years when the state is flush with windfall funding as is the case this year. The spending is far smaller than what’s outlined in the main state budget that authorizes $8.5 billion for spending on education, health care and other purposes.
Senate Bill 48 vetoed by the governor would have authorized about $25.2 million in one-time spending and another $25.2 million in ongoing spending. The money would have gone to a wide-ranging set of programs and priorities picked by lawmakers. Among the proposed items were law enforcement equipment, efforts to help homeless animals, student speech and debate clubs, medical equipment, meals on wheels for homebound residents and public safety programs and funding for food bank services in the East Mountains. Lawmakers have not taken up a supplemental spending bill in over 10 years before 2019, when an oil and gas boom resulted in surpluses.
The Governor’s veto of Senate Bill 48 has resulted in a very public clash between lawmakers and the Governor. There was a growing number of New Mexico legislators who who expressed support for calling themselves into “extraordinary session” through an emergency procedure that would allow them to override Governor Lujan Grisham’s veto of a $50 million spending bill. Convening such a session requires support from three-fifths of each chamber of the Legislature. Democrats in the House and Senate, who have solid majorities in both chambers, meet privately to debate whether to pursue an extraordinary session.
The end result is that the “new and improved” Junior Bill will be essentially the same spending bill vetoed by the Governor but will be modified to deal with her original concerns.
The Governors Office said the economic relief measures are still under development. Lujan Grisham spokeswoman Nora Meyers Sackett had this to say:
“The governor is committed to delivering economic relief to New Mexicans while maintaining fiscal responsibility. Our conversations with legislative leadership and state finance experts on the details of what that relief will look like are ongoing.”
GOVERNOR AND LEGISLATORS RESPOND TO SPECIAL SESSION CALL
Governor Michelle Lujan Grisham had this to say in her statement announcing the Special Session:
“As prices remain high nationwide, it is clear that we must act swiftly to deliver more relief to New Mexicans. Across the state, families are facing hard choices: can they afford to take their kids to school, to drive to work, to buy baby formula. It is our responsibility to do what we can to ease that burden. In this time of global and economic instability, we are taking action as one state government to protect New Mexicans’ paychecks and deliver additional relief and financial security.
“My administration has worked with this Legislature and Democratic leadership to great success, joining efforts to solve problems and deliver critical support and investments for New Mexicans, including half a billion dollars in tax relief this year alone. I look forward to continuing our work to deliver pragmatic and productive solutions that benefit New Mexicans, and I appreciate the Legislature’s agreement in prioritizing transparency and accountability in this and future sessions.”
Majority Leader Peter Wirth had this to say in a statement:
“Having a special session is a win-win for New Mexicans. … We will provide much-needed relief from high fuel costs and fund fifty million dollars in projects that will benefit communities across the state. New Mexico has had great accomplishments the last four years through the leadership of Governor Lujan Grisham working collaboratively with the legislature. This special session will be a continuation of that effort and will have a tangible, positive impact on New Mexicans.”
Senate President Pro Tempore Mimi Stewart had this to say in a statement: :
“We can all be very proud of the transformational budget that was just passed and signed. The programs and projects funded through the “junior bill” represent smaller but no less critical additions to the overall budget and I am happy we have an opportunity before us to revisit those appropriations and renew the commitments we made to our constituents to fund these important community needs.”
Speaker Brian Egolf had this to say in a statement:
“New Mexicans are counting on us to work together to provide critical funding for community projects that will make a real difference in their lives,” said “A special session will allow us to follow through on dozens of our planned local community projects and proactively assist New Mexicans with rising fuel prices.”
House Majority Leader Javier Martínez had this to say in a statement:
“Despite the fact that our state has unprecedented revenues, too many people are still hurting and rising gas prices are only making things worse. This special session, we have an opportunity to bring investment directly to every community in the state with the critical community projects in the Junior Bill and provide much needed relief for working New Mexicans who are facing rising gas prices.”
House Majority Whip Doreen Gallegos had this to say in a statement;
“By working together in a special session, we can take pressure off New Mexicans who are struggling with the sudden increase in gas prices. … Our communities are counting on us for the local investments in the Junior Bill that will help people across the state right away.”
Senate Minority Leader Greg Baca, a Republican from Belen, called the decision to hold a special session a political stunt and said in a statement:
“This special session is nothing more than a desperate attempt by the Governor to salvage her bid for reelection. … Her vindictive veto of a reasonable spending bill to fund law enforcement equipment, senior centers, aftercare programs, and other needs is inexcusable.”
COMMENTARY AND ANALYSIS
The ugliness and nastiness reflected by Senate Minority Leader Greg Baca comments are to be expected from all the Republicans. Senate Minority Leader Greg Baca is no doubt just angry and resentful that he and the Republicans are relegated to sitting on the sidelines and not at needed at all to call a special session. What Baca wanted was an “extraordinary session” in an election year as a means to embarrass the Governor and he did not get it.
The special session is indeed a win-win proposition for both the Governor and the New Mexico Legislature.