The state Legislature extended gross receipts tax relief to more businesses, appropriated funds for job training and deal-making in support of economic development, raised criminal penalties for copper wire theft, and killed a number of constitutional amendments opposed by business lobbyists during the session that wrapped up Thursday.
Rural hospitals got some relief but came up $36 million short of what they say they need to cover the cost of caring for patients who don’t pay their bills.
And legislators failed to pass bills to reduce telecommunications regulation, prevent payment of workers’ compensation benefits to employees when their own alcohol or drug use contributed to their injury or death, and to allow electric utilities to offer economic development rates designed to encourage companies to create jobs in New Mexico.
“It was a tough legislative session,” said Greater Albuquerque Chamber of Commerce President Terri L. Cole. “The partisan politics created by this election year made this one of the hardest legislative sessions for the business community that I can remember.”
A number of bills giving gross receipts tax relief to specific industries will further erode the state’s tax base, highlighting once again the need to reform New Mexico’s business taxation, said New Mexico Tax Research Institute President Richard L. Anklam.
GRT exemptions were passed for sales of aircraft parts and services, military aircraft and durable medical equipment.
A deduction for the sale of directed energy- or satellite-related research and development services and related materials to the Department of Defense failed to pass. Sponsors said the bill would help keep more military research projects in New Mexico.
The Legislature gave businesses 20 years to deduct a net operating loss from state corporate income taxes, up from the five years allowed today. Anklam said the new time frame during which businesses can carry forward losses they incur matches federal treatment.
Rural hospitals needed 31 of the state’s counties to pay the equivalent of a one-eighth percent gross receipts tax to cover the cost of uncompensated and indigent care, according to New Mexico Hospital Association President Jeff Dye. Legislators voted to give them a one-twelfth percent equivalent.
“This creates a very difficult situation at best for many of New Mexico’s hospitals,” Dye said. “In many cases, it could be devastating. I think there will be some very serious and grave discussions in some communities.”
Bills requested by the Martinez administration to support economic development efforts passed, including a $15 million fund to support local economic development, a recurring line item in the Economic Development Department budget for in-plant job training and a one-stop online portal where businesses can pay fees and complete state-required paperwork.
Programs to develop the state’s health care workforce and $86 million in water infrastructure capital outlay funds also were approved.
Business “fared very, very well” in stopping a number of constitutional amendments the chamber opposed, Cole said. Among them were one that would set a state minimum wage and raise it automatically, one that would tap the land grant permanent fund to pay for early childhood programs, and one that would eliminate the governor-appointed secretary of education position and replace it with an elected body.
A proposed amendment that did pass the Legislature would allow the State Investment Council to invest more money in international equities, raise SIC member accountability for investment decisions to conform with the national Uniform Prudent Investor Act, and lower the current 5.5 percent pay-out rate from the fund to 5 percent if the total value of the fund drops below $10 billion. Voters must approve the amendment for it to become law.
The Legislature failed to raise the amount of severance taxes that must be paid each year into the Severance Tax Permanent Fund from 5 percent now to 12.5 percent.
Journal Staff Writer Kevin Robinson-Avila contributed to this report.