Supreme Court rejects — for now — judicial branch's attempt to reactivate paid leave policy

SANTA FE — With the New Mexico judicial and executive branches at odds over a paid leave policy, it will be up to the state’s third branch of government — the Legislature — to take the next step.

A panel of retired judges appointed to hear the Supreme Court case decided Wednesday not to order a state budget agency to resume processing large leave payouts to departing judicial branch employees, as the judiciary had sought in a lawsuit.

By holding off on ruling on the legality of the paid leave policy, the five-judge panel cleared the way for lawmakers to set clearer guidelines during the upcoming 60-day session.

While retired Supreme Court justice Richard Bosson said a ruling on the underlying merits of the case was premature with the 60-day legislative session set to begin next month, he cautioned the issue could end up before the state’s highest court again.

“We hope the Legislature would be mindful of the separation of powers issues if they proceed in a certain direction,” Bosson said.

The judicial branch’s paid time off policy was adopted in May 2023 and applies to roughly 2,000 employees, who can use accrued time off for vacation, medical care or other approved purposes. It does not apply to judges.

After processing the leave payouts for about a year, the state Department of Finance and Administration stopped doing so in June.

That came after a legal opinion from Attorney General Raúl Torrez’s office concluded the judiciary’s policy likely violates state law, which allows departing state employees with at least 600 hours of unused sick leave to be paid for additional unused leave at a reduced rate.

Sen. Joseph Cervantes, D-Las Cruces, the chairman of the Senate Judiciary Committee, said after Wednesday’s court hearing he’s confident lawmakers will take action to clarify the law during the upcoming session.

“I think the Legislature will make it more clear in intent there’s some uniformity in how these payouts are handled,” Cervantes told the Journal.

“While the courts understandably were trying to create a more attractive package for their employees, (their paid leave policy) creates issues with other agencies,” he added.

The judicial branch argued in its lawsuit that Department of Finance and Administration Secretary Wayne Propst had overstepped his constitutional authority by blocking the paid time off payouts for more than 250 judicial employees who have left their jobs since June.

Mark Baker, an attorney representing the state court system, put it more succinctly during Wednesday’s arguments, saying the state agency should “stay in its lane.”

Judicial branch officials have also argued the paid leave program is cost effective in the long run, as some state employees currently take their accrued sick leave before retiring in order to avoid losing it.

Karl Reifsteck, the director of the Administrative Office of the Courts, said after Wednesday’s hearing the court system’s goal has been to operate in a way that best serves the public.

“We will continue to engage in a conversation with the Legislature on why the Judiciary’s paid time policy is cost efficient and helps to recruit and retain talented employees,” he said.

However, DFA officials have claimed the judicial branch’s leave program pays employees about 180% more than standard state payouts.

While Propst did not attend Wednesday’s hearing, he said in a statement the court-adopted policy had created a “potential constitutional crisis.”

He also said the Supreme Court’s ruling in the case would allow legislators, working in public hearings with judicial officials, to determine whether state funds should be used to pay for the courts’ paid time off policy.

Meanwhile, the dispute marked the latest legal battle between different New Mexico branches of government.

Past court battles have included legislators challenging Gov. Michelle Lujan Grisham’s authority to spend federal pandemic relief funds in 2021 and a group of judges objecting to then-Gov. Susana Martinez’s veto of judicial pay raises in 2014.

In this year’s case, all five sitting Supreme Court justices recused themselves, leading to the retired judges being appointed to hear the case.

Some of the judges appeared to relish being back on the bench on Wednesday, with their barrage of questions to attorneys leading to exceeded time allotments for both sides.

At one point, retired Court of Appeals Judge Michael Bustamante prompted laughter in the courtroom by prompting Baker to “say yes” in agreement that judicial employees are state employees.