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CALL TO ACTION!
PLEASE CONTACT THESE SENATE FINANCE COMMITTEE MEMBERS and register your opposition to HB 11.
Senator Benny Shendo, Jr. – (D) Bernalillo, McKinley, Rio Arriba, Sandoval and San Juan
Office Phone: 505-986-4264
Email: benny.shendo@nmlegis.gov
Senator Pete Campos – (D) Colfax, Guadalupe, Harding, Mora, Quay, San Miguel and Taos
Office Phone: 505-986-4267
Email: pete.campos@nmlegis.gov
Senator Roberto “Bobby” J. Gonzales – (D) Los Alamos, Rio Arriba, Santa Fe and Taos
Office Phone: 505-986-4362
Email: roberto.gonzales@nmlegis.gov
Senator Linda M. Trujillo – (D) Santa Fe
Office Phone: 505-986-4863
Email: linda.trujillo@nmlegis.gov
The Chamber has fought this onerous legislation for years and will continue to do so at every turn.
A recent Op-Ed in the Santa Fe New Mexican by Grover Norquist highlights the far-reaching negative impacts HB-11 will have on New Mexico.
“…This would impose a significant new tax burden on both workers and businesses — one
that New Mexico cannot afford. Facing strong taxpayer opposition to their initial
proposal for the largest tax increase in state history, Democrats have repackaged the bill
under a new name, but it remains a costly and destructive tax hike that will hurt New
Mexico businesses and workers.
New Mexico already faces one of the heaviest tax burdens in the region, with income
and corporate tax rates surpassing those of all neighboring states. The tax burden makes
the state less competitive for job growth and investment. U-Haul data for 2024 shows
more people move out of New Mexico than into the state. The U-Haul Growth Index put
the state in 37th place. Democrats are squeezing every dollar out of New Mexicans —
and people are leaving because of it.
The tax rate will be “adjusted annually,” with employees shouldering 55% of the cost and employers covering 45%, leaving the door open for ever-increasing taxes that burden workers and hinder economic growth. Any tax increase on businesses is borne by consumers through higher prices and on workers through lower wages, meaning that individuals will shoulder the burden of Democrats reckless tax hikes.
In other words, Democrats want to install a new tax hike dial and turn it up every year
without a vote.
Taxpayer dollars will fund another costly program that cuts paychecks and stifles job
growth. This medical leave tax takes from every paycheck, with taxpayers unlikely to
recover the amount they contribute. Because the fund must maintain 140% of prior
disbursements, perpetual tax hikes are inevitable.
The program ensures endless tax hikes, starting at $190 million and growing yearly,
siphoning more and more money from taxpayers’ pockets. Even moderate projections
show a $227 million deficit by 2031, with a worst-case shortfall of $870 million. How
will they cover it? By imposing new taxes — on top of the ever-increasing tax on wages
you will already pay.
Worst of all, New Mexico is sitting on a record $3 billion budget surplus while reaching
deeper into taxpayers’ pockets.
Instead of returning this surplus to the people through tax cuts—like many other states
are doing—New Mexico Democrats are choosing to expand government programs at the
expense of workers and businesses. Raising taxes in the face of a massive budget surplus
is unnecessary and irresponsible, while showing complete disregard for the financial
struggles of everyday New Mexican workers and business owners.”
We couldn’t have said it better ourselves! The proof is in the bill’s own Fiscal Impact Report put together by the independent Legislative Finance Committee.
The current version of HB 11 contains two parts. The first is the Welcome Child program, which would grant 12 weeks of unpaid new child leave (for birth, adoption or fostering) and $9,000 per family as a "refund." The second part of the program is the Family Wellness program, which grants six weeks of paid leave funded by new payroll taxes, costing employees and employers over $200 million a year with increases likely on the near horizon.
The Welcome Child portion of HB 11 costs $193 million per year, escalated each year by a cost-of-living adjustment. There is no specified fund to pay for these costs, so the Legislature will have to decide later how to cover them. If paid out of the general fund, it becomes a recurring obligation at a time when there is concern about losing significant Medicaid funding from the federal government. Some say this loss could be as much as $1 billion, but we won't know until later this year. If so, it's not exactly a great time to be locking in increased general fund expenses.
Deeper examination of the Family Wellness portion of the bill, in 2029 (the first year after full implementation of the program) the deficit ranges from $42.4 million growing to $227 million by 2031 in the "medium" employee utilization scenario. Under the "high" employee utilization scenario, the deficit in 2029 is $350 million, growing to $870 million in 2031. Only under the "low" scenario does the fund remain in the black, and given New Mexico’s high health risks, the Fiscal Impact Report (FIR) makes it clear that it is very unlikely that the “low” scenario will be likely.
The FIR also states, "If enacted, New Mexico would be the lowest-income state to implement a PFML program. The lower payroll base could result in the payroll contribution being insufficient to cover the needs of the fund." Here's what would happen to payroll taxes. If the high scenario plays out, the tax would go from .2% to .8%, quadrupling the tax rate. If the medium scenario plays out, the rate would go to .5%, two and a half times the original rate. Even under the low scenario, the rate goes to .3%.
Also, there's an annual cap of .1% on tax increases. So, if raising the tax rate won't cover the costs and keep the fund solvent, then the Legislature would have to bail the fund out. Payroll taxes can't be raised until 2030, so any deficits in 2028 or 2029 would require the Legislature to pony up the bucks, and that's a lot of ponying! Again, this would be at a time when it's possible that the Legislature will be scraping up every dime it can find to backfill loss of federal Medicaid funding.
Chandler insists that a shortfall "is never going to happen" and disagrees with these calculations based on other states' experiences (it’s evidently only convenient to listen to the Legislative Finance Committee when they agree with you). Chandler says before the program goes into effect there will be an actuarial analysis performed. Given that this legislation has been under consideration for at least three years, Sen. Gabriel Ramos (R-Grant, Hidalgo & Luna) has asked why an actuarial analysis hasn't already been done so solid numbers could be examined. Ramos said, "I don't like voting for a bill that's an idea. I want to see facts." Don't we all?!
We've fought long and hard against this business- and job-killing legislation, and we're not about to give up now. Unfortunately, a very workable measure in the House, House Bill 446 sponsored by Rep. Rebecca Dow (R-Doña Ana, Sierra & Socorro), which we supported, was killed in a House committee. This more-limited measure dealt only with family leave, costing a little more than $19 million per year paid for from the Early Childhood Trust Fund, the balance of which will soon reach $11 billion.
We'll keep you posted on what happens next, but again, in the interim, PLEASE CONTACT SENATE FINANCE Committee members by email or phone using the information provided above, let them know you oppose HB 11!
LIQUOR EXCISE TAX GETS PUT ON THE ROCKS
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