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Governor signs NM unemployment program revision

SANTA FE — A measure to shore up New Mexico’s unemployment compensation program was signed into law on Wednesday by Gov. Susana Martinez.

A new system will be implemented in 2015 for automatically setting the tax rates paid by about 45,000 businesses to finance the state-run program that provides benefits to unemployed workers. Taxes will remain unchanged for employers through next year.

“There is no other bill that will so positively, effectively and quickly help business like this one does,” said Terri Cole, CEO of the Greater Albuquerque Chamber of Commerce. “The bill insures long-term fund solvency, avoids massive and arbitrary increases, and eliminates political interference.”

In the past, the Legislature and governors have often dictated the range of rates that would be paid by employers — reducing the charges when the unemployment fund was flush with cash during good economic times and later raising tax rates when the fund started to run out of money.


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There was a balance of $30 million in the unemployment fund as of Tuesday, and it’s estimated that should reach about $142 million by the end of 2014.

The fund had a balance of more than $500 million but that was drained after the economy soured and payments increased for unemployment benefits. Unemployment has since leveled off in the state. The jobless rate was 6.8 percent in February, down from 7 percent a year ago.

Martinez said the new rate-setting system will provide more fairness for business owners.

Rates vary for businesses, depending on their employment history. The new system will require businesses to pay a higher tax rate if they have a heavy turnover in their workforce and unemployment claims exceed the employer’s payments into the fund.

Currently, businesses with the worst unemployment experience hit a maximum contribution rate and other businesses end up subsidizing them by paying more to keep the program solvent.

In 2011, Martinez used her line-item veto power to reject a $128 million tax increase on business that the Legislature approved to improve the unemployment program’s finances. The state Supreme Court later invalidated the governor’s action, but lawmakers and Martinez agreed last year to a smaller increase for employers to keep the fund solvent while an advisory group considered possible changes in the rate-setting system.

The latest plan for shoring up the unemployment fund passed the House and Senate this year with strong bipartisan support.

“Politicians in Santa Fe shouldn’t be using an unfair and arbitrary rate structure to change costs on businesses year after year,’ the governor said in a statement. “That’s not predictable, and it’s far too political. With these reforms, we are taking the politics out of the management of the unemployment fund and making it a true insurance system that is more predictable and fair for New Mexico small businesses.”

Also signed into law Wednesday was a measure to increase the civil penalties for fraudulently causing the overpayment of unemployment benefits.