On Tuesday, January 17, the New Mexico Legislature kick off its 60 day legislative session. As is the custom, Governor Michelle Lujan Grisham gave the traditional State of the State address outlining her priorities for the session. It was her first in-person State of the State address in 3 years because of the Covid 19 pandemic. During her address, she challenged lawmakers to forcefully address crime in new ways, reshape the tax code and offer child care to every New Mexico family.
With state revenue to reach a record high of $3.6 Billion or more in surplus revenue, she called for the creation of a new health care agency to move New Mexico closer to “universal health care,” and authorization of new funds for environmental protection and housing. The Governors speech also touched on the topics of the environment and the homelessness
MAJOR INITIATIVES OUTLINED
Among the proposals outlined in the governor’s speech were as follows:
“• $750 tax rebates for every taxpayer, middle-income tax cuts and changes to the tax code to address “pyramiding,” the way gross receipts taxes build on each other when assessed on each step of a longer transaction. Lujan Grisham said she would seek $1 billion in economic relief overall “to help more New Mexicans afford the things they need right now.”
- $10 million for a reproductive health care center in southern New Mexico and the codification of abortion rights in state law. Lujan Grisham campaigned heavily on preserving widespread access to abortion as a foundation of women’s rights and democracy, in the aftermath of the U.S. Supreme Court’s decision last year that overturned Roe v. Wade and left legalization up to the states. Leading Democratic legislators hope to send her a bill that would prohibit restrictions on abortion by local governments and shield patients and abortion doctors from harassment by out-of-state interests.
- Creation of a New Mexico Health Care Authority to consolidate services in one agency and move the state closer to universal health care. She also called for transparency in drug pricing.
- Providing child care and early childhood education to every family.
- New funds for environmental protection, rural health care and housing initiatives. She proposed $100 million, for example, to help communities affected by the largest wildfire in recorded state history. Environmentalists are renewing efforts to enshrine rights to clean air and water into the state Constitution, while Democratic state Rep. Patricia Lundstrom of Gallup is courting investments in hydrogen-fuel production as a transition away from the burning of fossil fuels in transportation and industry.
- Picking up the full health care premiums of teachers and school employees, and giving them a 4% raise. She also expressed support for extending learning time for students to help boost academic achievement. The governor and leading legislators are proposing a pay raise for state workers and public school educators of at least 4%. Taxpayers would pay for educators’ individual health care premiums under a proposal from the governor.
- New protections against eviction for renters, funding for mobile homelessness response teams and down payment assistance for homebuyers.
- Any number of new gun-control measures, including a ban on the sale of assault weapons, closing a loophole that she said allowed “straw purchases” of guns and penalties for people who don’t store firearms safely away from children. Surging gun violence in Albuquerque and concerns about mass shootings nationwide have spawned proposals for enhanced criminal sentencing and new gun control measures. New bills would ban large-capacity ammunition magazines and apply felony sanctions to ensure guns can’t be accessed by children. Democratic Senate Majority Leader Peter Wirth of Santa Fe has said he will sponsor a bill that bans firearms at all polling locations in response to the fears and frustrations of election workers.
The governor also proposed allowing “victims of gun violence to bring civil suits against firearm manufacturers.”
The links to the quoted news source is here:
PRICE TAG OF SPECIFIC BUDGET PRIORITIES
It was on January 10 the Governor released her proposed 2023-2024 fiscal year budget to the New Mexico Legislature totaling $9.4B in recurring spending, an 11.9% increase from the last fiscal year. The executive recommendation will maintain reserves at 34.9%, among the highest in state history, while increasing investments in priority areas like housing and homelessness, health care and behavioral health, education and child well-being, public safety, and economic development and tax rebates. The Governors proposed 2023 state budget plan will use the historic state revenue windfall to increase yearly spending by upwards of $1 billion. If enacted as outlined, the Governor’s proposed budget would represent a nearly 12% increase in spending compared to the 2022 fiscal year that ends on June 30, 2023.
The “price tag” highlights from the Governor’s proposed budget recommendation include the following:
HOUSING AND HOMELESSNESS
- $25 Million for rental assistance and eviction prevention
- $13 Millionto incentivize development and zoning updates
- $10 Million the state’s Home Ownership Down Payment Assistance Program
- $6 Million for a new comprehensive landlord support program to work directly with landlords to encourage them to use housing vouchers
- $4 Million for “Mobile Homelessness Response Teams” at the Department of Health that would deploy to homeless encampment’s to connect individuals quickly and directly with support services
HEALTH CARE & BEHAVIORAL HEALTH
- $200 Million to establish the Rural Health Care Delivery Fund to expand health care services and build new hospitals in rural New Mexico.
- $28 Million for the Health Professional Loan Repayment Program
- $10 Million for the New Mexicare senior caregiver support program
- $10 Million for a full-spectrum reproductive health clinic in southern New Mexico.
- $5 Million for additional support for alcohol abuse prevention and treatment
- $32.5 Million for graduate medical education programs across the state
- $7.7 Million for nursing programs at New Mexico’s higher education institutions
- $5.8 Million to maintain existing school-based health centers and expand access to more than 25,000 students
EDUCATION AND CHILD WELLBEING
- $220.1 Million for extended in-classroom learning time by increasing the number of minimum instructional hours per year in public schools
- $30 Million to provide healthy universal school meals and to eliminate school meal costs for every New Mexico child
- $2.9 Million to the Children, Youth and Families Department for 60 new protective services staff, to be supported by additional federal matching funds
- $277.3 Million for continued investments in affordable, high-quality child care
- $131 Million to maintain and expand access to high-quality pre-k education
- $40.4 Million for the continued expansion of early childhood home visiting
- $111.1 Million to provide a four percent salary increase for all school personnel
- $100 Million for health care premium costs for public school personnel
- $157.4 Million for the Opportunity Scholarships
- $100 Million continued law enforcement recruitment funding. In 2022, lawmakers approved $50 million for the fund and the money has already been dispersed in two rounds of funding. The city of Albuquerque has use the money it was given to give $18,000 in longevity pay to police officers with 18 more years of experience, not for recruitment.
- $4 Million for Law Enforcement Survivors Benefits
- $4 Million for Firefighter Survivors Benefits
- $2.2 Million to create two hotshot forest fire crews that could be dispatched to fight to fight wildfires within and without state borders
Economic Development & Infrastructure
- $1 Billion in economic relief through tax rebates
- $128 Millionimproving water infrastructure improvements in part by improving river flows into Elephant Butte Reservoir
- $146 Million for continued statewide broadband expansion
- $35 Million for Local Economic Development Act funding
- $75 Million for the Land of Enchantment Legacy Fund
Links to quoted news source material are here:
The Governors legislative agenda has also been reported as follows:
HEALTH CARE & BEHAVIORAL HEALTH
- Expanding and improving rural health care delivery: Establishing the Rural Health Care Delivery Fund, created with a $200 million investment, to provide support for rural health care delivery in parts of New Mexico often underserved by available health care options by providing funds for the establishment of new or expanded services.
- Protecting abortion access for New Mexicans: Codifying abortion rights protections in state statute to ensure access to reproductive health services is safeguarded.
- Expanding access to reproductive health services: Investing $10 million in capital outlay funding for a full-spectrum reproductive health clinic in southern New Mexico.
- Improving access to affordable, high-quality health care: Creating the New Mexico Health Care Authority, a comprehensive entity that will expand access to affordable health care and streamline the government’s efforts to support families and their health care needs while more effectively holding insurers accountable.
- Providing transparency for prescription drug pricing: Requiring licensed drug wholesalers to disclose prices and require Pharmacy Benefit Managers to disclose any increases of more than 40% over a five-year period, or more than 10% in the prior year, as well as the reasons for the increase.
EDUCATION & CHILD WELL-BEING
- Extending in-classroom learning time: Requiring and providing the resources needed for increased educational hours during the school year.
- Supporting special education: Providing extended learning time for students with disabilities, ensuring special education services are data-driven and effective, and increasing supports for special education educators.
- Ensuring teachers keep more of their salaries in their pockets: Covering the individual cost share for health care premium costs for school personnel, a first-of-its-kind initiative for New Mexico.
- Kids Kitchens – Establishing healthy universal free meals for students: Eliminating school meal costs for every New Mexico child. An additional $20 million capital outlay investment will fund school kitchen infrastructure improvements to enable schools to provide healthy and fresh foods for students.
- Attendance interventions: Requiring data-informed school attendance interventions aligned with student needs and expanding drop-out prevention and recovery efforts.
- Specialized Trust Funds: Lawmakers are hope to sock away billions of dollars into specialized trust funds, and use future investment earnings to underwrite programs ranging from smoking-cessation to highway construction and medical school teaching. It’s an investment strategy that has helped sustain public schools in New Mexico for generations through a $26 billion trust, partially sustained by income from oil- and gas-production leases on state trust land.
- Keeping repeat violent offenders off New Mexico streets: Establishing a “rebuttable presumption” to ensure that those accused of murder, gun crimes, rape or other sex crimes do not pose a danger to the community before being released pending trial.
- Addressing the scourge of gun violence: Keeping New Mexico families, communities and businesses safer through a robust tranche of gun legislation, including a ban on the sale of assault weapons, an end to the state loophole on straw purchases of guns, safe storage reforms, and a law allowing victims of gun violence to bring civil suits against firearm manufacturers.
- Tackling organized retail crime: Targeting offenders who fund organized crime through retail theft by creating the crime of organized retail crime in state statute, amending statutory language on robbery and shoplifting to encompass aggregated crimes of theft, and better enabling prosecution of commercial theft.
- Getting more police officers on the streets: Investing an additional $100 million in the Law Enforcement Recruitment Fund to continue supporting the hiring of law enforcement officers to forces across the state.
- Establishing parity in survivors benefits for first responders: Establishing a state fund for survivors benefits for the families of firefighters killed in the line of duty.
- Supporting public safety and government staffing: Amending PERA regulations to 1) allow for PERA retirees to return to work for no more than three additional years after having been retired for a minimum of one year and 2) raise the pension salary maximum to 100% in order to retain qualified personnel.
- Preventing wildfires: Lujan Grisham hopes to fund the first New Mexico-based corps of elite smokejumper firefighters to ensure a rapid response to future fires. State legislators want to make the state more resilient to climate-related disasters by speeding up the delivery of federal disaster aid and allow small water districts to band together as they rebuild from wildfires. Providing the executive with the authority to ban the sale and use of fireworks during drought emergencies.
- The Environment: Environmentalists are renewing efforts to enshrine rights to clean air and water into the state Constitution, while Democratic state Rep. Patricia Lundstrom of Gallup is courting investments in hydrogen-fuel production as a transition away from the burning of fossil fuels in transportation and industry.
ECONOMIC DEVELOPMENT & TAX REFORM
- Putting more money in New Mexicans’ pockets: Delivering economic relief through one-time rebates of $750 to each individual taxpayer or $1,500 to couples filing jointly.
- Reforming the state tax code: Supporting New Mexico working families and businesses by enacting tax policy reform, including reducing the gross receipts tax rate by an additional quarter of a percent, implementing anti-pyramiding for professional services in the gross receipts tax rate, and delivering personal income tax progression for middle-class New Mexicans.
- Continuing to support New Mexico’s booming film industry: Updating the New Mexico Film Tax Credit to further incentivize the hiring of more New Mexico residents, promote New Mexico’s diverse locations and cultures, expand productions to additional rural communities, and sustain robust investments in workforce development and job training.
- Protecting and preserving lands for generations to come: Establishing the Land of Enchantment Legacy Fund to create sustained funding for state programs that protect and preserve our environment. Programs that will be supported over the next three to five years through this funding include the River Stewardship Program, Healthy Soils Program and Outdoor Equity Fund.
- Minimun Wage: Democratic legislators want to provide automatic future increases to the statewide $12-per-hour minimum wage.
The links to the quoted news sources are here:
TYPICAL REPUBLICAN RESPONSE
Not at all surprising Republican lawmakers were highly critical of the Governors speech and as expected whined and complained and said that the governor ignored the states problems and simply offered more government spending.
Senate Minority Leader Greg Baca, R-Belen, said the Governor “glossed over” the serious challenges facing the state including crime, a shortage of doctors and an unfriendly business environment. Baca said the governor promoted renewable energy but failed to acknowledge the importance of oil and gas production. He called the governor’s administration “out of touch.”
Baca in particular was critical of the Governor’s ideas on gun control and said gun-control regulations aren’t the solution when the state is failing to keep firearms out of the hands of felons. Baca said this:
“Let’s enforce what we have. … We need a criminal justice system that people don’t look to and laugh at”.
Republican House Minority Leader Ryan Lane, R-Aztec, offered a similar assessment of the governor’s speech and said this:
“Most New Mexicans do not live in the utopia that Lujan Grisham described and Republicans are committed to working to provide meaningful relief and support to New Mexicans.”
COMMENTARY AND ANALYSIS
While hundreds of bills dealing with crime, the economy, public schools and more will be filed during the session, the state’s revenue bonanza will be at the forefront of many Roundhouse debates. During the 2023 legislative session, there is little doubt that debate will be hot and heavy on how to spend the historic surpluses.
There is indeed a lengthy list on what the surplus can be spent upon. The list includes:
Major infrastructure needs such as roads and major bridge repair across some of the most rural parts of the state with an estimated cost of $500 million, funding for wastewater projects, dams and acequia projects, the courts, law enforcement and the criminal justice system, funding for our behavioral health care system, job creation endeavors, economic development programs, funding for the Public Employee Retirement funds to deal with underfunded liabilities and benefits are all likely topics of discussion during the upcoming 2023 legislative session. All merit serious consideration and funding with the historic surplus.
Not at all surprising, some lawmakers have called for spending restraint despite the revenue windfall, saying a drop in oil prices and a possible global recession could mean a big drop in state revenue collections within the next several years. Senator Stuart Ingle, R-Portales, the state’s longest-serving legislator, had this to say:
“I think we better be real, real careful. … We just need to make sure we don’t overspend so much that down the road we have to find ways to fund or cut.”
What is also not at all surprising are fiscal conservatives, especially Republicans, calling for tax cuts and rebates. Whenever surpluses in state revenues occur, such as this year especially, Republicans always begin to salivate and proclaim all taxation is bad and that rebates and tax reform are desperately needed and the only way to go.
The Republican tired and old political dogma has always been that tax revenues are the people’s money and anything in excess of what is actually needed over and above essential government services should be returned to the taxpayer. It appears the Governor has bought into the argument. It is a short-sighted philosophy believing that only essential, basic services should be funded with taxpayer money such as public safety. If that were the case, there would be no public libraries, no museums, no zoos, no mass transit expansions and no memorial monuments.
MAJOR CAPITAL OUTLAY PROJECTS SHOULD BE IN THE MIX
The reality is that most if not all of the major priorities being identified by the Governor in her State of the State address will require reoccurring funding and revenues from taxation. What all too often is totally ignored because lack of revenues are major capital outlay projects that are for the benefit of the general public and that improve the overall quality of life. Roads and water projects are such priorities, but are not exclusive.
It is very disappointing is that Governor Michelle Lujan Grisham totally ignored advocating for major capital outlay projects in her State of the State address that could be transformative for the state and that improve the overall quality of life. Roads and water projects are such priorities, but are not exclusive. Most if not all of the major priorities identified in both the Governor’s and the LFC Budget for the 2023 legislative session will require reoccurring funding and revenues from taxation.
Given the sure magnitude of the surplus, it is likely municipalities, citizens and interest groups will be asking for funding for special capital projects such as swimming pools, parks, recreation facilities, sport facilities, such soccer stadiums, and entertainment venues. Some lawmakers have already come forward with different ideas on how to spend some of the state’s budget surplus, including the building of a high-speed train crisscrossing New Mexico from north to south.
The Governor and the legislature should listen and fund such projects while they can. For the last two years, the New Mexico United soccer team has been trying to get taxpayer money to build a soccer stadium. In 2020, the soccer team was able to secure $4 million in state funds. In 2021, Albuquerque taxpayers were asked to support a bond to pay for the stadium, but it was rejected. With a $3.8 in surplus revenue, the legislature should consider fully funding the facility which will be about $16 million.
Other major capital outlay facilities and projects that has been discussed for decades is improving the New Mexico State Fair and all of its aging facilities. In particular, demolishing the 60-year-old Tingly Coliseum and building a multipurpose entertainment and sports facility with the capacity of upwards of 20,000 has been a dream of many a Governor, State Fair Commission and Fair Managers.
On February 25, 2019 it was reported that there is a need for such a facility and EXPO New Mexico was in the final stages of conducting a feasibility study on the construction of a new arena on the state fairgrounds. Tingley Coliseum has been around since 1957 with capacity for 11,000. Over the years it’s been remodeled and upgraded but it is still a state fair rodeo venue. The state and Albuquerque for decades has needed a large capacity, multipurpose entertainment venue of upwards of 20,000.
During the 2023, 60 day legislative session that began on January 17 , there will be a consolidation and a consensus budget formulated that lawmakers will then approve for the fiscal year that will start on July 1, 2023 and end June 30, 2024. Indeed, the 2023 legislative session could very well turn out to be a “once in a century opportunity” to really solve many of the state’s problems that have plagued it for so many decades. It should also be viewed as an opportunity to build facilities that are needed and that will have a lasting impact on the state’s quality of life for decades to come.