The 60-day session began January 19 and will end March 20 at noon. COVID-19 changed many aspects of this session, not the least of which was the governor’s naming pandemic relief as one of her top priorities. Her $7.3 billion budget calls for $475 million in additional pandemic relief for New Mexico. Most legislative committee meetings are being conducted online, with public input largely limited to e-mails or online options such as Zoom comments.
Also included in this update is recent important business tax guidance from the New Mexico Taxation and Revenue Department.
BUSINESS and CORPORATE
Business and Corporate Bills:
Private Right of Action for Certain Statutes
HB50 creates a private right of action for persons who are injured in fact (economically or otherwise) or are imminently threatened with injury, to sue alleged violators under the Oil and Gas Act, the Air Quality Control Act, the Hazardous Waste Act, the Solid Waste Act, and the Water Quality Act. Actions would require 60 days’ notice to the responsible agency and the attorney general before an action could be commenced. If a regulatory agency with oversight is already prosecuting a civil action against the alleged violator, the claimant would be permitted to intervene in the ongoing action as a matter of right. The bill allows the court to assess civil penalties or order injunctive relief, or both, and allows a court to award reasonable attorney’s fees. The bill passed the House Energy and Natural Resources Committee and is headed to the House Judiciary Committee.
Uniform Code Secure Transaction Language
HB66 amends the New Mexico Uniform Commercial Code (“UCC”) to make conforming amendments to statutes that relate to secured transactions. The bill adds the definitions of “good faith” and “public-finance transaction.” Also, public finance transactions are added to the list of transactions exempted from the scope of the UCC. HB66 passed in the House unanimously and is in the Senate Judiciary Committee.
Historically Underutilized Businesses (relates to SB53)
HB82 creates the Historically Underutilized Business Opportunity Act, to encourage state agencies to purchase goods and services from historically underutilized businesses. To become a “historically underutilized business,” (“HUB”), a for-profit entity would apply for a HUB certificate from the Taxation and Revenue Department (“TRD”). To qualify a business must have an average gross revenue for the last three fiscal years that is less than $5 million or an average number of employees for the same time period that is fewer than 50 employees; the business must be certified as a “Resident Business” by TRD pursuant to the state Procurement Code; and the business must be more than 50%-owned by a woman or by a specified minority. Each state agency must set specific goals for the use of HUBs, and maintain and compile monthly reports that provide the information to the General Services Department related to compliance with the HUB Opportunity Act. HB82 passed in the House and has been sent to the Senate.
Public Banking Act
HB236 / SB313
HB236 and SB313 would create the Public Bank of New Mexico (“Bank”) as a governmental instrumentality under the Public Banking Act (the “Act”), and would be chartered pursuant to United States law. These bills establish an 11-member Board of Directors (“Board”) to govern the Bank, with most of the Board members’ being appointed by the New Mexico Legislative Council and by the Governor. The Act gives the Bank power to make contracts, acquire and dispose of property, accept deposits, borrow and lend money, make equity and debt investments, and incur indebtedness, among other things. The Act creates within the Bank a state banking fund (“Fund”), which will be initially funded with a $50 million deposit from the severance tax permanent fund. All money credited to the Fund is appropriated to, and retained by, the Bank for purposes of the Act. The Bank may make loans to FDIC insured state-chartered or federally-chartered lending agencies, to political subdivisions of the state, and to nonprofit entities, among others. The Bank may not make loans to private individuals or entities except for limited policy exceptions. The Bank is intended to pursue a policy of supporting new and growing industries in New Mexico. On February 18, HB236 received a Do Pass in the House Commerce and Economic Development Committee and is now in the House Judiciary Committee. SB313 is still in committee.
Small Business Recovery Act
SB3 is a COVID relief bill that changes the name of the Small Business Recovery Act (“SBRA”) of 2020 to the Small Business Recovery Act and expands the program. The SBRA was passed in 2020 to make low-interest loans available to small businesses affected by the COVID-19 pandemic. SB3 extends the deadline to apply for a Small Business Recovery Loan from December 31, 2020 to May 31, 2022 and increases available funding from $400 million to $500 million. It allows for terms of up to 10 years and for refinancing of the loan. It also loosens underwriting standards by not requiring borrowers have records demonstrating actual losses, nor are borrowers required to certify that the business does not expect to declare bankruptcy. Lastly, the bill expands the businesses eligible for the program by defining eligible borrowers as those having less than $5 million in net income in 2019, rather than those with less than $5 million in gross income. SB3 passed the Senate and was referred to the House Taxation and Revenue Committee.
Local Government Air Quality Regulations
SB8 amends the Air Quality Control Act and the Hazardous Waste Act to give local governments the ability to set minimum environmental standards that are more stringent than existing federal standards. If an environmental improvement or local board determines that emissions within its jurisdiction cause ozone concentrations in excess of 95% of the primary national ambient air quality standard, the board can adopt a plan and rules to control the emissions. The rules are applicable to sources of emissions only where ozone concentrations exceed 95% of the national standard. SB8 permits the adoption of rules to manage hazardous waste and storage tanks that are more stringent than the federal Environmental Protection Agency requirements. SB8 passed the Senate Judiciary Committee and was referred to the Senate Finance Committee.
Construction Manager General Contractor Act
SB37 enacts a new section of the Procurement Code to be titled the Construction Manager General Contractor Act. The bill would allow the Department of Transportation (“DOT”) to use an alternative, qualifications-based construction manager general contractor (“CMGC”) to provide preconstruction services for DOT projects. SB37 requires the secretary of DOT to adopt procedures for selecting, procuring, and contracting a project using CMGCs. The procedures shall define the scope of the project and require the CMGC to: (i) provide a range of preconstruction services and participate in project design, cost control, scheduling, and value engineering efforts and (ii) provide construction work at a guaranteed maximum price. Prior to design completion, the CMGC is to submit a guaranteed maximum price for construction of the project, after which negotiation may begin between the CMGC and the DOT. If negotiations are successful, the DOT will enter into a contract for construction services with the CMGC. Should negotiations fail, SB37 allows DOT to competitively bid the construction phase of the project. SB37 passed the Senate Tax, Business and Transportation Committee and was referred to Senate Judiciary Committee.
Public Health Order Termination and Renewal
SB74 amends and enacts statutory sections within the Emergency Powers Code (“EPC”), the Public Health Emergency Response Act (“PHERA”), and the Public Health Act (“PHA”) to provide for automatic termination under certain conditions. SB74 has passed two Senate committees and has been referred to the Senate.
Public-Private Partnership Act
SB143 creates the Public-Private Partnership Act providing legal authority for governmental entities to enter into agreements with private entities to develop public transportation projects. The bill creates a Public-Private Partnership (“P3”) Board staffed by the New Mexico Finance Authority (“NMFA”). The P3 Board would review and approve P3 agreements that meet a minimum threshold of agreements for greater than $10 million. The bill would authorize NMFA to participate in the financing of the P3 agreements through a P3 project fund. NMFA would approve any financing for loans and grants from the fund. The bill includes standard language allowing NMFA to issue stand-alone revenue bonds as a form of financing of these projects and explicitly ensures any bonds issued for these projects are not an obligation of the state. Governmental entities pursuing a P3 agreement may apply for up to $75,000 in grant monies to assist in evaluating the feasibility of a proposed project. SB143 was referred to three senate committees, but has not emerged from the first.
Finished Hemp Product Sales
Designed to support New Mexico business, HB88 would amend the Hemp Manufacturing Act to require the Environmental Improvement Board (“EIB”) to create rules regulating the distribution and sale of “hemp finished products.” HB88 would define “hemp finished products” as products “intended for retail sale for human ingestion or inhalation and [have] hemp or hemp extracts [with] a [THC] concentration of not more than .3%.” HB88 also imposes civil and criminal liability for violating EIB’s rules. Finally, HB88 amends certain definitions in the Hemp Manufacturing Act and also adds definitions for “hemp distributor” and “hemp retailer.” The bill has an effective date of July 1, 2021. It currently sits in the House Judiciary Committee.
Cannabis Regulations Act
HB12 and HB17; SB13, SB288 and SB363
HB12, HB17, SB13, SB288, and SB363 seek to legalize recreational cannabis by enacting the Cannabis Regulation Act (“CRA”). The bills are largely similar. Specifically, the CRA decriminalizes the possession, use, production, transportation, and sale of commercial cannabis for adults and for non-medical purposes. Under the CRA, adults age 21 or older could purchase, possess, and transport no more than two ounces of cannabis flowers and 16 grams of extract.
HB12 and HB17 propose slightly different licensing schemes. Under HB17, the Cannabis Regulation Division (“CRD”) will regulate CRA licensing. By July 2, 2021, the CRD will begin issuing transitional licenses to those persons already licensed for medical cannabis activities. CRD will also begin to accept and process applications for transitional and regular licenses no later than the Act’s effective date. CRD licensing includes licenses for a variety of cannabis activities, such manufacturing, producing, and selling. Licenses will be valid for two years but can be revoked or suspended.
Under HB12, the CRA would establish the Cannabis Control Division (the “CCD”) within the Regulation and Licensing Department. Under the CRA, the CCD, as opposed to the CRD, would be responsible for promulgating rules and policies related to the licensing and regulation of the commercial, production, distribution, sale, and consumption of cannabis. The CRA will also create the cannabis regulation fund which will be used to fund various state agencies. Perhaps more notably, the CRA allows for the expungement of arrest and conviction records for violations of state criminal laws related to marijuana.
On February 15, 2021, HB17 was tabled by the House Health and Human Services Committee by a vote of 6 to 5; the House Health and Human Services Committee also presented a substitute for HB12 on February 16.
Substituted HB12 passed out of the House Taxation and Revenue Committee and is now pending on the House’s temporary calendar; SB13, SB288, and SB363 are in the Senate Tax, Business and Transportation Committee.
Unlike last year, some version of the CRA is expected to pass and become law.
“Reciprocal Participant” Definition
SB340 seeks to clarify the Lynn & Erin Compassionate Use Act’s definition of “reciprocal participant” to ensure that only non-residents can provide proof of enrollment in a different state’s medical cannabis program. This is likely an attempt to remedy the Department of Health’s failed regulatory attempts to require New Mexico residents use the New Mexico medical cannabis process, as opposed to other states’ medical cannabis programs, to access medical cannabis in New Mexico.
Gross Receipts Tax and Permanent Fund for LEDA Projects
HB11 is a COVID relief measure that provides a one-time, $200 million appropriation from the general fund to the renamed Local Economic Development Recovery Act Fund for grants to certain businesses, to be administered by the New Mexico Finance Authority (“NMFA”) in cooperation with the Economic Development Department (“EDD”). Funding to applicant businesses will be prioritized by the greatest percentage reduction in revenues, measured on a quarterly basis. The maximum allowable grant to a business is $100,000, paid in quarterly installments. The bill includes employment, revenue, and reporting requirements and limits uses of awarded grants to reimbursement of rent, lease or mortgage obligations. It also requires NMFA reserve recovery grant funding for a business that is awarded funds but subsequently loses eligibility, in the event that business becomes eligible again in a succeeding quarter.
The bill passed in the Senate with amendments. The House has concurred with those amendments. HB11 heads to the governor’s desk where it is expected she will sign the measure.
Workforce Training Residency Requirements
HB155 makes permanent the reduced residency requirement under the Job Training Incentive Program (“JTIP”) when the training is provided for high-wage jobs. The Commerce and Economic Development Committee and the Labor, Veterans’ and Military Affairs Committee have recommended the bill pass.
LEDA Priority for Certain Projects
HB169 amends the Local Economic Development Act to include the construction or upgrades to facilitate the use of water-efficient or clean energy technologies or to meet or exceed green building certification standards in the definition of “economic development project.” This definition would also include an entity that develops water or broadband infrastructure in the definition of a qualifying entity. The bill has been sent to House Energy, Environment and Natural Resources Committee.
Electric Generation Project Requirements
SB72 proposes a major change to last year’s HB50, which allowed IRB treatment for electric transmission and generating facilities and provided for in-lieu of property tax sharing for the state and various school districts. This bill amends the municipal and county IRB statutes to establish a formula to share negotiated in-lieu of property tax payments between the IRB sponsoring jurisdiction (generally county governments) and the school districts within that sponsoring jurisdiction. It proposes that all school districts located within the county or municipal jurisdictions would split the formula amount equally. The Senate Tax, Business and Transportation has recommended this bill to the Senate Finance Committee.
Local Economic Development Retail Businesses
SB91 extends the allowable use of local government Local Economic Development Act funds to unincorporated areas of New Mexico and removes the non-compete clause for municipalities more than 15,000 people, allowing the municipality to make the decision to support new or expanding retail businesses that may directly compete with existing local businesses. The Senate Tax, Business and Transportation has recommended this bill to the Senate Finance Committee.
Economic Development Incentive Reports
SB98 requires entities that receive economic development tax credits, rebates, exemptions, deductions or IRB approvals to report to the Economic Development Department with specifics related to employment, salaries and capital investments made in the previous calendar year. Taxation and Revenue Department (“TRD”) will be required to compile an annual economic development tax expenditure budget and will have the authority to request information from executive or local government agencies. For any economic development tax expenditures that cost more than $10 million dollars per fiscal year, TRD will have to complete an objective assessment and an economic analysis. The Senate Tax, Business and Transportation has recommended this bill to the Senate Finance Committee.
Hospital Care Facilities Contract
SB179 would add skilled nursing and rehabilitation hospitals to the list of institutions that could be funded through a mill levy at a county or municipality level under Section 4-48B NMSA 1978, the Hospital Funding Act. Criteria required for this type of funding are specified. This bill contains an emergency clause and would become effective immediately upon signature by the governor. Sent to Senate Tax, Business and Transportation Committee.
Healthy Workplaces Act / Paid Sick Leave Act / Paid Family and Medical Leave Act / Family-Friendly Workplace Incentive Program
HB20, HB37, HB38, and HB134
HB20, HB37, HB38, and HB134 are a suite of bills that seek to create, expand, and/or support paid sick leave and FMLA workplace policies.
HB20 and HB 37 would create a right to paid sick leave for New Mexico workers, specifically, each employee would accrue one hour of paid sick leave for every 30 hours worked. The two bills differ in the details. For instance, earned sick leave would carry over from year to year, but the yearly maximum would be no less than 64 hours under HB20 and 56 hours under HB37. HB20 was reported by committee with Do Not Pass but with a Do Pass recommendation on Committee Substitution, meaning it passed with significant amendments. HB37, which contains an emergency clause so that it would become effective immediately upon the governor’s signature, is currently in committee.
HB38 would enact the Paid Family and Medical Leave Act which would create a “family and medical leave trust fund.” Employees covered by the program would be able to take 12 weeks’ leave within a 12-month period to deal with the employee’s or a family member’s medical issues. HB38 was reported by committee with Do Pass recommendation with amendment(s).
HB134 seeks to encourage small-business employers to adopt and implement family-friendly workplace policies, including paid leave, health support, flexible work schedules, and economic support. The Act would also establish supplemental sick leave during a public health emergency – 80 hours or, for part-time employees, twice the weekly number of hours worked. This would begin upon declaration of a public health emergency and be effective until four weeks after declaration that the emergency is over, and could be used for personal care or a family member’s care, which are defined broadly. HB134 is in committee.
Unemployment Compensation Restriction Changes
HB44 eases eligibility restrictions for unemployment compensation through January 1, 2023, and in the future when a federal or state public health emergency is declared pursuant to the Public Health Emergency Response Act.
Under such circumstances, the bill proposes that an individual’s absence from work shall be presumed to be involuntary and for good cause and an individual shall not be denied benefits when the division finds the absence was due to exposure or diagnosis with the communicable disease that is the subject of the emergency, a need to care for a family member diagnosed with the communicable disease that is the subject of the emergency, an underlying medical condition that makes an individual susceptible to a threatening communicable disease, instructions from an employer to not report to work or an individual’s usual childcare being unavailable.
The bill contains an emergency clause, calling for the bill to take effect immediately for public peace, health and safety. It is presumed that the benefits would be paid out of the state’s Unemployment Trust Account. HB44 is currently in committee.
Phased Minimum Wage Increase
HB110 would amend the state’s Minimum Wage Act to expand coverage for all but a few enumerated types of employees. Primarily, HB110 would require both high school students and tipped employees to be paid the set minimum wage. It also repeals an unused statutory provision that authorizes the employment of certain individuals with physical or mental disabilities at subminimum wage rates.
HB110 also would revise the scheduled increases to the minimum wage as follows:
- Starting January 1, 2022 the minimum wage would rise to $12.00 per hour
- Starting January 1, 2024 the minimum wage would rise to $15.00 per hour
- Finally, starting January 1, 2025, the minimum wage would be adjusted upward (but never downward) every year based on increases to the cost of living as measured by the United States Department of Labor’s consumer price index.
The bill was reported by the House Labor, Veterans’ and Military Affairs Committee with a Do Pass recommendation. If passed, HB110 would have an effective date of July 1, 2021. After much discussion, the House & Economic Development Committee chose not to entertain any motion, either to kill the bill or pass it on, so for now it stays on the table, where it can be brought back up for discussion at any point.
College Faculty Minimum Wage
HB289 includes new requirements for colleges and universities. Specifically, all public post-secondary educational institutions in the state would be required to pay all non-tenure-track faculty members a minimum wage of $5,000 per course assignment credit hour.
The bill also would provide additional disclosures be made to all non-tenure track faculty members of any public post-secondary educational institution in the state whenever possible and alter how benefits based on service in employment would be calculated. HB289 is currently in committee.
Removing the Exception to the Minimum Wage Requirement for Secondary School Students
SB35 would eliminate the lower minimum wage for students who are “regularly enrolled in secondary school,” which is in effect high school students working after school hours or when school is not in session.
However, the bill does not eliminate the exemption from the minimum wage for individuals 18 years or under who are not students. Currently, there is no statewide minimum wage that covers such individuals, although they may be covered by federal, municipal or county minimum wage laws. Currently, the federal minimum wage is $7.25 an hour.
SB35 was reported by committee with Do Pass recommendation.
Extended Unemployment Benefits
SB52 would prohibit the state from triggering seven additional weeks of extended benefits in periods of high unemployment. In order to be compliant with U.S. Department of Labor regulations concerning when extended benefits can be triggered, the current statute must be amended to strike language that restricts the activation of extended benefits. SB52 was reported by committee with Do Pass recommendation.
Podiatric Service Cost Sharing Limits
HB34 would prohibit insurers from requiring larger copayments or coinsurance payments from a patient than the patient pays for primary care services. If the policy provides for coinsurance on a percentage basis, the percentage should be the same or less than the percentage for primary care.
HB34 passed by the House 43-24. Referred to Senate Health and Public Affairs Committee and Senate Tax, Business and Transportation Committee.
Independent Role for Nurse Anesthetists
HB35 would change the scope of practice for a Certified Registered Nurse Anesthetist (“CRNA”) to allow the CRNA to function either in an independent role or in collaboration with other healthcare providers in accordance with the policies of a healthcare facility. The current law requires the CRNA to function as part of a team in which the patient’s care is directed by a physician, dentist, or podiatrist. HB35 passed by the House 69-0. Referred to Senate Health and Public Affairs Committee and Senate Tax, Business and Transportation Committee.
Elizabeth Whitefield End-of-Life Options
HB47 and SB308
HB47 and SB 308 would provide terminally ill but still mentally competent adults the option of having medical assistance in bringing about their own deaths. Currently it is illegal for a medical practitioner to provide a prescription that a patient might take to end his/her life; this bill would sanction that practice, with multiple safeguards. HB47 was reported by committee with a Do Pass recommendation with amendment(s).
Primary Care Council Act
HB67 would establish an unpaid primary care council to advise state government, especially the Department of Human Services, in finding means to increase New Mexicans’ access to healthcare while improving their health and controlling the costs of healthcare. Specifically, using its study of other models and of local data, the primary care council would be charged with developing a five-year plan to address access to care, quality of care, and cost of care through means of increasing primary care provider availability in New Mexico.
HB67 was reported by committee with Do Pass recommendation. A committee recommendation has been announced by the House of Representatives, but the report has not been formally adopted by the body. Adoption of these actions will be considered by the House at a later date.
Medical Malpractice Definitions
HB75 would remove hospitals from the definition of healthcare provider in the New Mexico Medical Malpractice Act, effective December 31, 2021. The Medical Malpractice Act provides protections to patients and qualified healthcare providers in medical malpractice lawsuits through, among other things, caps on the amount of damages, other than medical and medically related expenses, that a patient may recover and through the Patient Compensation Fund, which pays all medical and medically related expenses for patients who have settled or prevailed in a lawsuit. There are approximately 24 hospitals covered by the Medical Malpractice Act that would no longer be subject to the protections of the Act as of January 1, 2022 if this bill becomes law. There could be significant consequences for the Patient Compensation Fund, as the amounts paid into the Fund by the hospitals would cease, but the Fund could still be required to pay for claims against hospitals that arose during the time the hospitals were covered under the Act. The hospitals would be required to purchase malpractice insurance, for which premiums may be significant without the limitation on damages provided by the Act.
This bill is in conflict with SB239, which proposes significant changes to the Medical Malpractice Act, but leaves hospitals in the definition of healthcare provider. HB75 passed the House 35-34. Referred to Senate Tax, Business and Transportation Committee and Senate Judiciary Committee.
Nurse Practitioner Changes
HB109 would amend the authority of certified nurse practitioners to dispense drugs to their patients and removes the requirement of certified nurse practitioners and clinical nurse specialists to submit formularies to the Board of Nursing. This bill is still in committee.
Behavioral Health Practitioner Changes
HB125 would make a number of changes to the licensing of behavioral health practitioners under the Professional Psychology Act, the Counseling and Therapy Act, and the Social Work Practice Act. The most significant of these changes automatically would extend licenses through public health emergencies and for six months thereafter, would allow supervision of trainees to be done through technology (rather than in person), would require that licensees “observe the code of ethics” rather than “be of good moral character,” and would require licensees to be New Mexico residents for the duration of their licensure. The Bill would also require the various Boards in charge of licensing for behavioral health practitioners to issue licenses to applicants who have held equivalent licenses in other jurisdictions for a specified number of years. HB125 is currently in committee.
HB152 would remove the current requirement that the Chiropractic Board submit nominations to fill Board vacancies to the governor, and have vacancies filled directly by appointment from the governor. The bill would also allow the Board to issue temporary licenses to first-time applicants for up to 12 months, so long as the applicant is supervised by a licensed chiropractic physician, and would allow for temporary licenses to chiropractic physicians licensed in other states who are serving as a substitute for a chiropractic physician licensed in New Mexico who is on leave or vacation. Finally, the bill would exempt chiropractic physicians or chiropractic college educators licensed in other states from New Mexico licensure requirements in certain circumstances. HB152 is still in committee.
Counseling and Therapy Licensure
HB178 seeks to make a few minor clarifications to the Counseling and Therapy Practice Act. The bill would clarify that an alcohol and drug abuse counselor must have completed at least three years of work experience in the alcohol and drug abuse field before providing supervision to other counselors, and would add “human services” and “family services” to the list of types of degrees that qualify for inclusion in the fields of “counseling-related field” and “substance abuse-related field.” At this time, HB178 is in committee.
Physical Therapy Licensure Compact
SB60 would enter New Mexico into the multi-state Physical Therapy Licensure Compact. The Compact is intended to increase mobility of physical therapists and increase access to licensed physical therapists by removing hurdles to licensure. The Compact would allow a physical therapist with a license in his or her home state to obtain a license in New Mexico without going through the full licensure application process. Instead, the physical therapist would need only to be licensed, be eligible for the “privilege” of obtaining a license in New Mexico under the Compact, not have any adverse action against his or her license, and pay any required fees. SB60 is in committee.
Rural Primary Care Clinician Loan Repayment
SB61 would provide for a loan repayment program to assist rural primary care organizations to recruit and retain eligible clinicians. The Rural Primary Care Clinician Loan Repayment Act would also create the “rural primary care clinician loan repayment fund” as a non-reverting fund in the state treasury. SB61 was reported by committee with Do Pass recommendation with amendment(s)
Healthcare Provider in Medical Malpractice
SB239 would make significant changes to the Medical Malpractice Act, primarily in accordance with the December 31, 2020, Final Report of the Office of the Superintendent of Insurance making recommendations for changes to the Act. The Act currently covers hospitals, outpatient healthcare facilities, physicians, podiatrists, chiropractors, and certified registered nurse anesthetists who choose to become qualified under the Act. The bill proposes to add new providers to the definition of healthcare provider, including optometrists, psychologists, advanced practice nurses, doctors of acupuncture and Oriental medicine, emergency medical technicians, and paramedics. It also increases the cap on damages from $600,000 to $750,000, defines when and how punitive damages may be sought or awarded, establishes venues in which medical malpractice cases may be filed, and makes changes to the review process required prior to filing a medical malpractice lawsuit. This bill is in conflict with HB75, but is supported by organizations representing hospitals, doctors, and nurses. Significant opposition is anticipated by the supporters of HB75.
SB239 received a Do Pass-No Recommendation from the Senate Health and Public Affairs Committee last night.
Medical Records Disclosure
HB269 would make the New Mexico statute regarding confidentiality of electronic medical records consistent with HIPAA by allowing disclosures without patient authorization for purposes of treatment, payment, and healthcare operations. Introduced February 9, 2021, HB269 was referred to the House Health & Human Services Committee and House Judiciary Committee.
No Behavioral Health Cost Sharing
SB317 would prohibit health insurers from requiring cost-sharing, in the form of coinsurance or copayments, from the patient for behavioral health services until January 1, 2027. SB317 has been referred to Senate Health and Public Affairs Committee and Senate Finance Committee.
Hospital Billing Changes
SB382 would require hospitals to provide a single itemized bill to patients within sixty (60) days of discharge that includes all care provided on the site of that hospital during a single episode of care. The time may be extended to ninety (90) days if the hospital is unable to provide the bill due to negotiations with third-party payers. The itemized bill must identify which care and services were provided by participating providers and which by non-participating providers and, for each item or service, identify which portion of the bill is being paid by third-party payers and which portion is the patient’s responsibility. Failure to comply with the requirements would be a violation of the New Mexico Unfair Practices Act, subjecting the hospital to penalties under that Act and requiring the hospital to forfeit the right to bill the patient for any portion of care not paid by a third-party payer. SB382 has been referred to the Senate Health and Public Affairs Committee and Senate Judiciary Committee.
Sustainable Building Tax Credit
HB15 expands Sustainable Building Tax Credits for personal income tax and corporate income tax, while retaining the existing Sustainable Building Tax Credits but provides that the existing Sustainable Building Tax Credits are only applicable to projects that are commenced prior to the effective date of the bill (if it passes), and completed by January 1, 2022. The expanded tax credit requires a higher level of LEED certification to qualify for any credit, and provides lower tax credits per square foot as compared to the existing Sustainable Building Tax Credits. HB15 received a Do Pass recommendation.
Real Estate Transfer Tax / Recordation Tax Act
HB19 / SB386
HB19 creates a new excise tax, which is imposed on all instruments evidencing a transfer of any interest in real property, to be paid by the person purchasing such real property. The tax is imposed at 0.75% on transfers between $500,000 and $750,000, and 1.25% on transfers of $750,000 or more. If enacted, the tax would take effect July 1, 2021. The bill was tabled in committee.
SB386 creates a new excise tax to be imposed on all instruments evidencing a transfer of any interest in real property, which will be paid by the person purchasing such real property. The tax is imposed at $0.25 for every $100, or fractional part thereof on the value of each instrument transferring an interest in real property, with the amount of tax limited to not more than $100,000. If enacted, the tax would be in effect beginning on July 1, 2021.
SB386 also proposes a new Food Gross Receipts Tax, imposed at the rate of 4% on the total amount of money or other consideration received from selling food at a retail food store in New Mexico. Under the bill a “retail food store” is defined as an establishment that sells food for home preparation and consumption and that meets the federal definition of a retail food store for purposes of the federal supplemental nutritional assistance program, irrespective of whether the establishment actually participated in the federal program.
If enacted, SB386 would become effective July 1, 2021; however, it remains stalled in committee.
Tax Penalties and Remedies Changes
HB90 proposes several changes to tax statutes. First, the bill amends the process for tax credit applications. Under the bill, tax credit applications submitted to the New Mexico Taxation and Revenue Department (“TRD”) must be “complete” before the timeline to approve or deny the credit begins to run. The Time period within which the Department must approve or deny an application for a tax credit, otherwise the application is deemed approved, is shortened from 180 days from the time the completed application was filed to 120 days. An application for a tax credit is “complete” when it has all fields completed, includes all attachments required by the application instructions, and is submitted in accordance with the application instructions, regardless of whether the Department requests additional documentation after the complete application is submitted. In addition, the bill provides clarifications regarding the protest procedures for property valued by the Department’s Property Tax Division. The bill also provides that property owners whose property was not previously reported to the Department, but which was subsequently valued by the Department, have the same protest rights of property owners who reported their property. Finally, the bill clarifies that appeals of county-assessed property proceed to district court, while appeals relating to state-assessed property go to the Court of Appeals. HB90 unanimously passed the House and was sent to the Senate on February 17.
Omnibus Tax Bill
HB98 makes changes to various sections of New Mexico tax law. Relevant changes proposed by this legislation are summarized below:
- Removes the $5 minimum late filing penalty for corporate income tax returns.
- Creates a limitation period within which a taxpayer claiming the Rural Job Tax Credit must apply for the credit. Taxpayers will be required to apply for the Rural Job Tax Credit by December 31 of the calendar year following the 12-month qualifying period for which they are applying.
- Changes the definition of lease as used in the Gross Receipts and Compensating Tax Act to clarify the difference between a lease and a license. The bill also adds a definition of licensing to the Gross Receipts and Compensating Tax Act. Under the bill, a “lease” is “an arrangement whereby, for a consideration, the owner of property grants another person the exclusive right to possess and use the property for a definite term” whereas a “license” is “an arrangement whereby, for a consideration, the owner of property grants another person a revocable, non-exclusive right to use the property.” This distinction is important, as there has been much litigation in New Mexico regarding the distinction between a lease and a license.
- Codifies a taxpayer’s right to rely on alternative evidence for deductions under the Gross Receipts and Compensating Tax in the absence of a nontaxable transaction certificate related to deductions for which such right was previously unclear.
- Clarifies that the deduction for food sold by retail grocers need not be sold at the retail grocer’s location to be deductible, just that the food be sold by the retail grocer. This addresses some uncertainty that existed related to this deduction, particularly given the rise in curbside pick-up and home-delivered food sold by retail grocers outside of their store locations.
- Clarifies that the deduction for healthcare practitioners provided by Section 7-9-93 may be taken not just by individual healthcare practitioners, but also by an “association of healthcare practitioners” including corporations, unincorporated business entities, and other legal entities, so long as they are organized by, owned by, or employ one or more healthcare practitioners; however, 501(c)(3) corporations and health maintenance organizations cannot claim the deduction. This deduction has been the subject of continued litigation, despite a Department regulation which permits the foregoing. The codification of the intent of the regulation in the statute should clarify this issue.
- Allows the Department to require electronic filing of returns and payment of tax. The Department is currently only permitted to mandate electronic filing of returns, not electronic payment.
- Amends the tax credit against compensating tax for taxes paid in another state to include tax paid on services in another state. Currently, the credit applies only to tax paid on property in another state.
- Amends the Renewable Energy Tax Credit to clarify that the credit can be claimed for ten years, and that the credit is permitted to offset changes in deferred tax liabilities.
HB98 unanimously passed the House and has been sent to the Senate.
Health Insurance Premium Surtax
HB122 raises the health insurance premium surtax from 1% to 3.75% of the gross health insurance premiums and membership policy fees received by a taxpayer on hospital and medical expense-incurred insurance or contracts, nonprofit healthcare contracts, and health maintenance organization subscriber contracts covering health risks, except for dental- or vision-only contracts.
HB122 has passed two House committees with a Do Pass recommendation. It currently resides before a third house committee.
Oil and Gas Tax Changes
HB181 amends the Oil and Gas Severance Tax Act by temporarily exempting captured carbon dioxide used in enhanced oil recovery. The bill would reduce the tax rate to 0% for carbon dioxide used in an enhanced recovery project involving the injection of captured carbon dioxide in the process of displacing oil and other liquid hydrocarbons that is demonstrated to sequester the carbon dioxide pursuant to rules promulgated by the New Mexico Tax and Revenue Department. If enacted, the reduction of the tax rate will remain in effect until December 31, 2030. HB181 remains in committee.
Manufacturing Services Gross Receipts
HB278 expands the manufacturing deduction for gross receipts to include manufacturing services. The bill also creates a new deduction from gross receipts for the sale of accounting services, engineering services, financial management services, information technology services, human resources services, legal services and temporary services if such services are made to another business entity. HB278 is currently in committee.
Restaurant Gross Receipts Tax Deduction
SB1 is a COVID relief measure that creates a new gross receipts tax deduction for receipts of a food or beverage establishment received between March 1, 2021 and July 1, 2021 from the sale of prepared food or non-packaged beverages served or picked up at the food or beverage establishment, or delivered to customers for immediate consumption. A “food or beverage establishment” includes food trucks, restaurants, bars, breweries, and winegrowers, but does not include fast-food restaurants. The bill also a creates a new $600 income tax credit for tax year 2020 for persons with incomes up to $31,200 for individuals, and $39,000 for heads of household, surviving spouses, and married individuals filing joint returns. SB1 passed the House on February 24.
Waiver of Penalties on Certain Taxes
SB25 is a COVID relief measure that provides a waiver of penalty and interest imposed for failure to pay state and local gross receipts taxes, and compensating tax that became due beginning on March 23, 2020 (the date of the state’s initial public health order in response to COVID-19) until the expiration of the state’s public health order. In order for a taxpayer to qualify for the waiver of penalty and interest payment of such taxes must be made in full on the 25th day of the third month after the expiration or rescission of the public health order. If passed the bill would take effect immediately upon the governor’s signature. SB25 received a Do Pass recommendation in committee.
Data Center Gross Receipts Tax Deduction
SB26 creates a new deduction from gross receipts for selling or leasing data center equipment to the owner, operator, or a qualified co-location tenant in, a qualified data center. SB 26 remains in committee.
New Income Tax Bracket
SB56 creates two new personal income tax brackets for taxable years beginning on or after January 1, 2022 clawing back the Richardson era personal income tax cuts by increasing the top rate to 8.2%. SB56 remains in committee.
Corporate Income Tax Rates
SB211 proposes to increase corporate income tax rates for the tax year beginning January 1, 2022, through incremental increases over the succeeding four tax years. It would result in a top rate of 7.6% up from the current top rate of 5.9%. It would also lower the state gross receipts and compensating tax rates from a current rate of 5.125% to 5.0%. If enacted, the effective date of this bill will be July 1, 2021. The bill is being held in committee pending construction of an overall tax package later in the session. SB211 is currently in committee.
Water and Sanitation Gross Receipts Tax
SB328 removes the six-year limitation on a water and sanitation gross receipts tax (“GRT”) increment imposed by a water and sanitation district. The effective date of this bill, if enacted, will be July 1, 2021. SB328 is in committee.
Angel Investors Tax Credit Changes
SB402 increases the Angel Investment Credit from 25% of the qualified investment to 50%, provided the maximum credit allowed is $62,500. The bill also makes the credit refundable. If enacted, the increased, refundable credit would apply to applications for the angel investment credit for qualified investments made on or after January 1, 2021. SB402 is currently in committee.
GUIDANCE FROM NEW MEXICO TAXATION AND REVENUE DEPARTMENT
Taxability of COVID-19 Relief Payments
Many of the payments made to individuals and businesses under pandemic relief programs are not subject to taxation, but there are some notable exceptions that taxpayers should be aware of according to new guidance issued by the New Mexico Taxation and Revenue Department.
Programs highlighted in the bulletin include:
- Economic Impact (stimulus) Payments. The federal Internal Revenue Service has issued clear guidance that these payments are not subject to federal income tax. Because New Mexico Personal Income Tax is based on federal adjusted gross income, these payments likewise are not subject to New Mexico income tax.
- Paycheck Protection Program (“PPP”) loans. Under federal rules, these loans are not subject to New Mexico Personal Income Tax. They also are not subject to New Mexico Gross Receipts Tax.
- Grants provided through CARES Act funding. Grants received under programs using federal CARES Act money are generally not subject to GRT, though there are some exceptions.
- However, the U.S. Internal Revenue Service has issued guidance that CARES Act grants provided to most businesses are subject to income tax. New Mexico income tax is calculated using federal adjusted gross income, so grants subject to federal income tax are also subject to state income tax.
Special rules may apply to certain groups of taxpayers, such as tribal entities and hospitals. Taxpayers who believe they may fall into one of those groups should seek further guidance.
Changes to Business Tax-Filing System
The New Mexico Taxation and Revenue Department has announced it will be redesigning its Combined Reporting System (“CRS”) to create separate returns for Withholding Tax, Gross Receipts Tax, Compensating Tax, and other business-related tax programs. The project is expected to be completed in July 2021.
Also in July, state law will require some businesses to convert to destination-based sourcing for reporting gross receipts taxes. Under destination-based sourcing, businesses pay the tax rate in effect in the jurisdiction where their goods and most services are delivered. Most taxpayers now pay the GRT rate for the location of their businesses. Special rules will apply to construction services and real estate commissions.
More information, including a form for submitting comments and questions, is available in the News & Alerts section of tax.newmexico.gov.