In the regular legislative session, we saw a lot of magical thinking.
Among Democrats, it was, “Yes, we know business is strapped, but let’s add some taxes and employee benefits.” Among Republicans, it was, “Let’s welcome the public back to the Roundhouse during a deadly pandemic.”
It was one of those sessions that kept business lobbyists hopping.
On the plus side was significant COVID relief. The governor signed bills to deliver $200 million in grants to businesses, with the hardest hit businesses getting priority, and offer long-term, low-interest loans up to $150,000.
Business groups pushed for both bills. The no votes came from Republicans who argued the relief would be unnecessary if the governor would just reopen the state. Magical thinking.
On the minus side, business fended off a slew of harmful bills. They ranged from attempts to stop oil and gas in its tracks to the well intentioned but ill-timed wish to help employees.
A bill to undo the hard-won minimum wage compromise of 2019 and raise the wage died in committee.
Then there was the tax increase adventure. One bill would have increased the corporate income tax rate, created a new tax bracket for corporations with taxable income over $1 million, and reduced the gross receipts tax rate. New Mexico has changed the corporate tax rate 10 times in the last 13 years, according to legislative analysis. Both business and the state Economic Development Department said it sends a terrible message at a time when we need new companies to relocate.
That bill stalled, but the corporate income tax piece was loaded into another bill to expand the Working Families Tax Credit and the Low Income Comprehensive Tax Rebate. It would also have raised income taxes on individuals earning more than $75,000 and reduced the capital gain exclusion.
If the idea was to soak the rich, it would also have soaked the middle class, along with doctors and medical professionals, who are in short supply. The Senate Finance Committee pruned the tax increases and the bill passed.
I’ve complained for years that governors and lawmakers keep trying to pass off tinkering and meddling as reform, and that’s what this was.
Senate Finance Chairman George Muñoz, D-Gallup, agreed that corporate tax increases and frequent changes send a poor message. He sees a need to restructure taxes and promises work in the interim. Maybe there’s hope.
The paid sick leave bill provoked hours of furious debate that lasted until the last minutes of the session. Sponsors argued that nobody should have to go to work sick; businesses argued that they can’t afford it. The bill requires businesses to offer paid sick leave starting in July 2022, when Dems optimistically assume economic recovery even though experts predict recovery will take longer. Magical thinking.
It’s now before the governor.
Last week, Rob Black, president and CEO of the New Mexico Chamber, was hard pressed to sound optimistic during a Zoom address to the Economic Forum. More than one-third of small businesses have closed.
“We are not working in a particularly business friendly environment,” especially compared to the states around us, he said.
The first challenge is increasing the state’s working-age population. That group is shrinking, while the over-50 set is increasing. “That’s not a pattern for success,” he said.
Black urged the business community to think differently, focus on equality, build non-traditional alliances, and “learn to negotiate in a blue-state environment.”
An example of nontraditional alliances is that business and unions both testified for Muñoz’s economic development bill to encourage big projects to come to the state. It’s gotten no attention but is on the governor’s call for the special session.
We don’t have time to dither, Black said. “We were, and are, in a world of hurt right now.”