SANTA FE – A proposal to shore up New Mexico’s unemployment fund by increasing the amount businesses pay into the fund on behalf of each employee moved out of a Senate committee Thursday and could be voted on today.
The measure, sponsored by Senate Finance Committee Chairman John Arthur Smith, a Deming Democrat, would increase the tax rate businesses pay by an estimated $15 million next year.
It is opposed by Gov. Susana Martinez, who has said such a tax hike could hurt the state’s economy by causing unemployment to increase.
Martinez vetoed part of a bill earlier this year that would have raised the business tax rate by $128 million. Six Democratic lawmakers subsequently filed a court challenge arguing the first-term governor didn’t have authority to enact the veto.
Smith’s proposal, Senate Bill 29, would raise the tax rate by a lesser amount than the previous bill and could present Martinez with an alternative to having the court resolve the issue if no legislation is passed during the ongoing special session.
“The bottom line is it’s not perfect but it’s better than what’s staring us in the face at the Supreme Court,” Smith said.
Meanwhile, Sen. John Sapien, D-Corrales, introduced a proposal Thursday that offers a different approach: keeping current business tax rate in place next year while providing for a possible future tax hike and a $50 million loan from the state’s main operating fund if the fund’s balance continues to erode.
That bill, Senate Bill 39, bears similarities to a Martinez-backed bill introduced earlier this week by Sen. Steven Neville, R-Aztec.
The unemployment fund’s balance was $126.7 million as of Sept. 14, according to the Department of Workforce Solutions.
Due to the state’s high unemployment rate and generous jobless benefits – some of which were trimmed earlier this year – the fund’s balance dwindled from more than $500 million three years ago and is projected to go insolvent by early 2013 if additional changes aren’t enacted.
On Thursday, two Republicans supported Smith’s bill, which the Senate Finance Committee approved 9-2, while two others opposed it. Democrats on the committee unanimously voted in favor of the proposal.
“We are doing our very best in this troublesome economy to do the least harm to our employers,” said Sen. Sue Wilson Beffort, R-Sandia Park, who voted in favor of the bill.
— This article appeared on page A6 of the Albuquerque Journal