2017 Special Session Updates

May 26 Update, 10:00pm

Earlier this evening the Governor took final action on the 4 bills that were passed by the legislature. Most importantly she signed HB1 -Supplemental General Appropriations which funds higher education. The Governor did line item veto $500,000 in nonrecurring funding for the Water Resources Research Institute but did not veto the recurring funding for the institute.  All other programs were left intact.

Click here to view a copy of HB1

In addition to HB1, the Governor took action the remaining bills as follows:

HB2- Partial Veto

SB1 – Partial Veto

SB2 – Vetoed

Thursday, May 25, 5:30pm, Update 2

The legislature convened on Wednesday, May 25, 2017 for the 2017 1st Special Session and both houses recessed on the afternoon of Thursday, May 26, 2017. The legislature will reconvene on Tuesday May 30, 2017 at 1:00 pm which will require the Governor to sign the bills within a 72 hour period from the time she received the bills (excluding Sundays).

The House and Senate introduced a total of 16 bills and passed four. The passed bills include HB1 – Supplemental General Appropriations; HB 2 (revenue bill) – Tax Fund & Distribution Changes; SB1 (revenue bill) – Severance Tax Bond Project Changes; and SB 2 (revenue bill) – Tax Changes. HB1 restores the legislative branch and higher education funding that the Governor vetoed after the 2017 regular session in HB2-General Appropriation Act. The other bills would provide revenue to maintain a balance budget and/or increase reserve levels. SB1 would provide the necessary revenue to keep the budget in balance and was also requested by the Governor in her proclamation announcing the special session.

The Governor has until 2:16 pm and 2:23 pm on Monday, May 29, 2017 to act on HB1 and SB1 respectively.

The following is a brief summary taken for the Legislative Finance Committee fiscal impact reports:

HB 1 – Supplemental General Appropriations

The bill restores the funding vetoed by the Governor in HB2 for both the legislative branch and higher education at the legislatively passed level or the executive requested levels (1 percent across the board reduction). In addition, it includes an increase of $1.0 million for the higher education department for the student financial aid program and $1.0 million for the cancer center at the UNM Health Sciences Center as requested by the Governor.

HB 2 – Tax, Fund & Distribution Changes

Provides approximately $84.9 million in general fund revenue in FY 18.

  1. Closes the loophole and levels the playing field to allow the collection of gross receipts tax on internet sales;
  2. Levels the playing field for hospitals by bringing all hospitals into the state and creates a universal hospital deduction;
  3. Suspends monthly distributions to the legislative retirement fund for five years and moves the funding to the General Fund for the first 2 years and to other retirement funds for the following 3 years.
  4. Creates a rainy day fund by distributing revenue in excess of an annual five-year average for the oil and gas emergency school tax to the tax stabilization reserve and repeals the taxpayer dividend fund and allows the balances in the fund to accumulate over time; and
  5. Requires separate reporting for certain GRT deduction, including sale of a service for resale, wind and solar generation equipment, hospital receipts, sale of prescription drugs, and manufacturing services.

SB 1 – Severance Tax Bond Project Changes

Provides approximately $92.4 million in general fund revenue for FY17 and $8.0 million in FY18.

LFC Summary – “The Senate Finance Committee Substitute for Senate Bill 1 (SB1) allocates up to $81.4 million of supplemental severance tax bonds (SSTB), generally reserved for public school projects, to replace prior year general fund appropriations for capital projects (Section 1). The bill also appropriates up to $81.4 million in senior severance tax bonds (STB), generally used for statewide capital outlay projects, to the public school capital outlay fund for public school projects (Section 2). These actions result in available funding for public school capital outlay projects being held harmless while increasing the general fund by $81.4 million.” This bill would balance the general appropriations act.

SB 2 – Tax Changes

The LFC estimates that the bill will generate between $41.6 and $62.5 million in revenue for the tax stabilization reserve in FY18 (used to build up reserves); $12.7 million for the general fund in FY18, and $18.4 million for road funds in FY18. The bill includes the following provisions which are effective January 1, 2018:

  1. Increases the gasoline tax by 5 cents per gallon;
  2. Increase special fuels tax by 5 cents per gallon;
  3. Creates a state road maintenance fund;
  4. Increases the motor vehicle excise tax by 1 percent;
  5. Specifies the petroleum products loading fee will be $150 per load until state reserves reach 5 percent;
  6. Delay the five-year phased reduction of corporate income tax (CIT) by two years; and
  7. Imposes a new weight-distance identification permit fee in Section 7-15A-13 of a flat $55 per vehicle.

Thursday, May 25 Update

The legislature convened yesterday at noon for a special session to address the line-item vetoes in HB2 for higher education and the legislative branch.  Both Houses made motions to override the Governor’s line-item vetoes but the motions failed.  There was one Republican (Rep. Maestas-Barnes) that voted for the override.  After the motions failed both Houses introduced bills and met in committee and on the floor. 

 The House Appropriations and Finance Committee held a hearing on higher education at which Chancellor Carruthers, President Winograd (CNM), and President Alred (ENMU-Ruidoso) provided testimony and addressed the impacts of the veto to their respective sectors.

 The legislature passed two bills yesterday that address the restoration of funding for the legislative branch and higher education (HB1-Supplemental General Appropriations) and (SB1-Severance Tax Bond Project Changes) which provides additional revenues to balance the budget.  Both bills will be sent to the Governor once they are enrolled and engrossed.  The legislature is expected to recess once all business is completed and convene once the Governor takes action on the bills.  Under this scenario, the Governor will have 72 hours to take action on the bills that are passed by the legislature.

HB1 General Appropriations Act restores funding for Higher Education and the Legislative Branch.  In addition to the restoration of recurring higher education funding and the legislative branch, it also includes non-recurring funding for higher education including: $1 million from University of New Mexico unrestricted cash balances for the Cancer Center at the Health Sciences Center, and $1 million from cash balances in the special programs fund of the Higher Education Department for student financial aid.  The bill also appropriates $400,000 in non-recurring funding to the Legislative Council Service for a tax study (See SB 6-Professional Tax Study).

The Senate Finance Committee will meet today (Thursday)  at 9:45 am and the Senate is scheduled to meet on the floor at 10:00 am.  The SFC will likely take action on HB2-Tax, Fund & Distribution Changes  and the full Senate is expected to hear it thereafter. The House is scheduled to reconvene today at 11:00 am. 

Click on the pages below to view a list of the bills introduced yesterday. Watch our Facebook page for regular updates.