The 60-day 2023 New Mexico regular legislative session, which convened January 17, closed at noon on March 18. Only some of the bills that passed both chambers will be signed by the governor and be enacted into law. Legislation not acted on by Governor Grisham will be pocket vetoed on April 7. The effective date of legislation that is not a general appropriations bill, a bill with an emergency clause, or any other specified effective date will take effect on June 16. The following is a summary of select bills that were considered by the state legislature that may be of interest to our business clients and friends.
- Business and Corporate
- Economic Development
- Employment and Labor
- Anne P. Browne
- Suzanne W. Bruckner
- Felecia N. Cantwell
- Lisa Y. W. Cosper
- John A. Dragovitz
- Alex G. Elborn
- Tina Muscarella Gooch
- Jesse D. Hale
- Wade L. Jackson
- Isaac A. Leon
- Deborah E. Mann
- Marcella Alvarez Morgan
BUSINESS & CORPORATE
Controllable Electronic Records – HB90 – Signed into law by the governor April 5
HB90 would amend, repeal, and enact sections of the Uniform Commercial Code to address commercial transactions involving virtual currencies and other technological developments. The proposed legislation adds the definition of “controllable electronic record,” which means a record stored in an electronic medium that can be subjected to control pursuant to Section 55-12-105 NMSA 1978. The changes made by HB90 are consistent with the approved and recommended changes of the Uniform Law Commission. According to the Attorney General’s office, the proposed amendments in HB90 were drafted by the Uniform Law Commission in partnership with the American Law Institute. The Uniform Law Commission approved and recommended the new provisions be enacted in all states during its July 2022 meeting. HB90 was signed by the governor on April 5 and goes into effect on January 1, 2024.
Filing of Liens with Property Owner – HB179 – Signed into law by the governor March 30
HB179 would change NMSA 1978, Section 48-2-6, Mechanics’ and Materialmen’s Liens, to require filers of liens to provide notice of the lien to the property owner within 15 days of filing the lien with the county clerk. HB179 was signed by the governor on March 30.
Alcohol Delivery, Licenses, and Ad Money – HB364 – Signed into law by the governor March 30
HB364 removes the prohibition on licensees in Class A counties with an indoor retail space of more than 10,000 square feet from contracting with third-party delivery companies for the delivery of alcoholic beverages. HB364 also removes the prohibition on those same licensees from delivering spirituous liquors. Finally, HB364 prohibits all licensees from accepting advertisement money from suppliers in exchange for preferential listing of a product in that licensee’s delivery ordering system. HB364 was signed by the governor on March 30.
Bankruptcy Exemptions – SB216 – Signed into law by the governor April 4
SB216 makes changes related to garnishment and garnishment exemptions in bankruptcy law. Currently, income is exempt from garnishment at a value equal to 75% of a person’s disposable earnings or an amount equal to a 40-hour work week at the federal minimum wage. SB216 keeps the 75% limit intact, but changes the value of a work week to the highest applicable minimum wage in that person’s area. The current home value exemption is up to $60,000. SB216 increases this value up to $150,000, or $300,000 if their spouse died within the prior two years and the deceased spouse would have otherwise been able to claim the exemption. SB216 includes other adjustments to various exemptions and indexes all exemption amounts to inflation based on the consumer price index. SB216 was signed by the governor on April 4 goes into effect on July 1, 2023.
DID NOT PASS
Revised Uniform LLC Act – HB281 – Did not pass
HB281 would have repealed the existing Limited Liability Company Act and replaced it with the Revised Uniform LLC Act developed by the Uniform Law Commission, which is reportedly enacted in twenty states. The Revised Uniform LLC Act seeks to keep up with legal developments and case law applicable to limited liability companies. For example, HB281 would have provided more flexible management structures. HB281 also provided that shareholder meetings for a New Mexico corporation can be held through remote communications and more streamlined approach to restating articles of incorporation with only board approval. HB281 did not pass either chamber.
Paid Family and Medical Leave Act – SB11 – Passed the Senate; did not pass House
SB11 would have established a 12-week paid family medical leave benefit during any 12-month period for almost all workers in the state. SB11 would have required employee contributions of 0.5% and employer contributions of 0.4% of wages into a fund used to support the benefit. The Legislative Finance Committee found that the contributions and appropriations from the bill may not be sufficient and the fund would become insolvent and trigger a provision requiring the Secretary of the Department of Workforce Solutions to increase rates. SB11 passed the Senate but did not advance in its House committee. Proponents of the bill have stated they will introduce a similar bill in next year’s legislative session and that they have the support of Governor Grisham.
Names and Addresses of LLC Members – SB209 – Did not pass
SB209 would have required that the name and address of each member of a limited liability company be included in the company’s articles of organization or amended articles of organization. The Office of the New Mexico Secretary of State provided feedback saying this would have allowed it to have a constant point of contact with the company. However, opposing viewpoints pointed out that a simpler alternative is to require a company to inform the Secretary of State of an address change. HB281, discussed above, would have accomplished this alternative. SB209 did not pass either chamber.
Cannabis Record Expungement – HB314 – Signed into law by the governor March 30
HB314 requires the courts to implement a procedure allowing persons seeking automatic expungement of cannabis and cannabis paraphernalia charges to verify whether the expungement has occurred and request expedited expungement. HB314 was signed by the governor on March 30 and goes into effect June 16, 2023.
Medical Cannabis ID and Renewal – SB242 – Signed into law by the governor April 4
SB242 requires qualified patients to reapply for a registry identification card, including a statement from a practitioner, no sooner than 30 days before the registry identification card expires. SB242 was signed by the governor on April 4 and goes into effect June 16, 2023.
DID NOT PASS
Cannabis Packaging Requirements – HB157 – Did not pass
HB157 would have amended the cannabis packing and labeling requirements to prohibit (1) the use of packages or labels that mimic the brand or design of products safe for child consumption, and (2) the use of cartoons or images commonly used to market to minors. HB157 did not advance in the House.
Medical Cannabis “Safety-Sensitive Position” – HB292– Did not pass
HB292 would have changed the definition of “safety-sensitive position” to mean a person who is required to carry a firearm or operate a commercial vehicle as part of the person’s employment. The Lynn and Erin Compassionate Use Act allows adverse employment action against an employee who works in a safety-sensitive position. HB292 did not advance in the House.
Cannabis Regulation Changes – HB313 – Did not pass
HB313 would have made several substantive changes to cannabis law. The legislation was amended by the House, (1) removing the proposed addition of a cannabis nursery license, (2) directing the Cannabis Control Division to promulgate rules allowing for the conversion of producer microbusiness and integrated cannabis establishment licenses to producer and vertically integrated cannabis establishments licenses, and (3) allowing for nonprofit cannabis corporations to convert into a for-profit corporation. HB313 passed in the House, but did not advance in the Senate.
Cannabis Tax Distributions – HB315 – Did not pass
HB315 would have provided a specific distribution of the cannabis excise tax to the Community Reinvestment Grant Fund and the Substance Use Disorder Prevention and Treatment Fund. HB315 did not advance in the House.
Cannabis Background Check – HB331 – Did not pass
HB331 would have amended the Cannabis Regulation Act to require a state criminal history background check and a national criminal history background check for applicants. HB331 did not advance in the House.
Cannabis Regulation Act Changes – HB418 – Did not pass
HB418 would have made several changes to the Cannabis Regulation Act. The proposed legislation criminalized the unlawful synthesis of tetrahydrocannabinol, and required licensees to post signs that warn customers there may be long-term adverse health effects from the consumption of cannabis. HB418 did not advance in the House.
Cannabis Seed to Sale Tracking System – HB493 – Did not pass
HB493 would have created a seed-to-sale tracking system that monitors cannabis from seed or immature plant through the sale of cannabis. The Cannabis Control Division would conduct compliance checks at cannabis establishments to maintain the tracking system. HB493 did not advance in the House.
Creative Industries Division in Economic Development Department – HB8 – Signed into law by the governor April 5
HB8 creates a new section of the Economic Development Division, the “Creative Industries Division” and establishes a fund to provide for grants for projects or programs that promote the growth of creative industries. The purpose of the new division would be to increase and promote creative industries in New Mexico including development for tourism, entrepreneurs and small businesses, educational and workforce training, and help establish public infrastructure. HB8 was signed by the governor on April 5 and goes into effect July 1, 2023.
Improvement Special Assessment Act – HB228 – Signed into law by the governor April 5
HB228 allows the board of county commissioners of a county to establish programs to encourage the development of certain property improvements. The bill outlines application processes, financing rules, and repayment conditions. The bill would also allow multiple counties to jointly administer a plan. HB228 was signed by the governor on April 5.
Metro Development Act Changes – SB251 – Signed into law by the governor April 4
SB251 amends and repeals certain provisions of the current law and allows local government to delegate to the metropolitan redevelopment agency the power to approve loans. The bill will increase certain property tax revenue and gross revenue tax (“GRT”) to fund a metropolitan redevelopment project. SB251 would also allow local government to issue bonds from GRT revenue and property tax revenue. SB251 was signed by the governor on April 4. It repeals the prior law and go into effect on July 1, 2024.
DID NOT PASS
Public Works Project Contributions – HB46 – Did not pass
HB46 would have required contributions to apprentice and training programs for all public works construction projects. This bill sought to establish a fund for approved apprentice and training programs, maintenance of those funds, and penalties for employers who fail to comply with the requirements. HB46 passed in the House and was sent to the Senate, where it languished in committee.
Rural Health Care Project Revolving Fund – HB47 – Did not pass
HB47 would have allowed the New Mexico Finance Authority to create and maintain a fund to make rural health care project loans. The bill sought to establish loan terms, reporting requirements and duties to establish and maintain the fund, appropriating $7,500,000 from the general fund to allow for the planning and development of medical practices in rural communities. The bill stagnated in its final House committee.
Economic Transition Division – HB188 – Did not pass
HB188 sought to create an Economic Transition Division within the Economic Development Department. The purpose of the Division was to create taskforces to prepare and publish an economic transition plan and provide data about the status of New Mexico’s natural resource extractive industries, affected communities, and workers who might feasibly be displaced as a result of extraction industry closures. HB188 was sent to the House Government, Elections and Indian Affairs Committee with a Do Pass Recommendation but did not advance.
Public-Private Partnership Act – HB213 – Did not pass
HB213 would have allowed public partners to enter into public-private partnership agreements to facilitate public projects and creates a board to manage the project fund including authorizing grants, loans and bonds. HB213 passed in the House but did not advance in the Senate.
County Industrial Bond Changes – SB152 – Did not pass
SB152 sought to repeal a section of the law regarding the filing and hearing of complaints that a proposed project would compete with an existing business. SB152 relates to county industrial revenue bonds only, as the same requirements do not apply to municipalities. SB152 did not advance beyond committee.
EMPLOYMENT & LABOR
Employee Leasing Act – HB255 / SB204 – HB255 was signed into law by the governor March 30; SB204 did not pass
Both HB255 and SB204 would have amended the Employee Leasing Act to add “a group health plan sponsored by an employee leasing contractor shall be treated as a multiple employer welfare arrangement for purposes of the Insurance Code.” HB255, which passed both chambers, also adds “a group health plan sponsored by an employee leasing contractor shall be a fully insured plan” and makes explicit that such plans shall be subject to the federal Patient Protection and Affordable Care Act. HB255 was signed by the governor on March 30; SB204 did not advance beyond committee.
Displaced Worker Eligibility – HB449 – Signed into law by the governor March 30
HB449 will amend Section 62-18-16 NMSA 1978, the Energy Transition Act (“ETA”), revising the definition of a “displaced worker.” HB449 will define a “displaced worker” as a New Mexico resident who (1) was terminated from employment, or whose contract was terminated due to the abandonment of a New Mexico facility producing electricity that resulted in the displacement of at least 40 workers, and (2) meets any other eligibility criteria established by the Department of Workforce Solutions. HB449 contains an emergency clause and became effective immediately upon the governor’s signature on March 30.
DID NOT PASS
Minimum Wage Increase – HB25 / HB28 – Did not pass
HB25 and HB28 sought to increase the minimum wage in a stepped fashion with increases, the amounts of which were specific to the individual bills, occurring January 1 of each successive year. Neither HB25 nor HB28 advanced beyond committee.
Public Safety Employees Return to Work after Retirement – HB64 / HB65 – Did not pass
HB64 and HB65 sought to amend NMSA 1978, Section 10-11-8 regarding allowing retired law enforcement and fire department employees to commence employment subsequent to their retirement. Neither HB64 nor HB65 advanced beyond committee.
Employee Free Speech Act – HB245 – Did not pass
HB245 would have prohibited employers from taking or threatening retaliatory action against an employee because of the employee’s refusal to (1) attend an employer-sponsored meeting to communicate political matters; or, (2) listen to speech or view communications that communicate political matters. HB245 did not advance beyond committee.
Workers’ Compensation Violation Penalties – HB329 – Did not pass
HB329 sought to amend Section 52-1-61 NMSA 1978 to increase the maximum penalty for failing to file a report or for violating the Workers’ Compensation Act from not more than $1,000 for each occurrence to not more than $2,500 per occurrence. HB329 did not advance beyond committee.
Changes to Workers’ Compensation – HB455 – Did not pass
HB455 would have increased the amount of workers’ compensation claims discovery costs to be advanced by the employer from $3,000 to $10,000, increased the maximum on awardable attorney fees, and give the Workers’ Compensation Administration discretion to increase the above-described attorney fee “cap” by $3,000 for “good cause” for each violation of Section 52- 1-28.1 NMSA 1978. HB455 did not advance beyond committee.
Reproductive and Gender-Affirming Health Care Freedom Act – HB7 – Signed into law by the governor March 16
HB7 applies to public bodies or agents of public bodies and prohibits discrimination, retaliation, or otherwise penalizing a person based on choices related to use of reproductive health care services or services or gender-affirming health care. The bill also prohibits denial or restriction of, or interference with a person’s right to seek such care but does not require insurers to pay for such care unless the services are otherwise required to be covered by contract or federal law. HB7 was signed by the Governor on March 16 and will go into effect on June 16, 2023.
Breast Health Exam Coverage – HB27 – Became law after passing both chambers
HB27 requires individual and group health insurance policies issued in New Mexico, except for high deductible policies with health savings accounts unless the deductible has been met, to provide coverage without cost-sharing for diagnostic and supplemental breast exams. HB27 passed the House and the Senate and became law as of March 16 as it did not require signature from the governor. It will apply to policies issued in New Mexico on or after January 1, 2024.
Health Care Practitioner Non-solicitation (and Non-competition) – HB385 / SB106 – SB106 was signed into law by the governor April 4; HB385 did not pass
HB385 sought to add to existing law making non-compete provisions in health care practitioner agreements unenforceable by also making non-solicitation of patients or employees of the party seeking to enforce the provisions void, unenforceable, and against public policy. The house bill did not pass either chamber, but the Senate version did.
SB106 addresses the same existing law, but adds pharmacists and physician assistants to the definition of health care practitioner. SB106 does not address non-solicitation, meaning that since it passed both chambers and HB385 did not, the non-compete provisions would be unenforceable against pharmacists and physician assistants. SB106 was signed by the governor on April 4.
Prescribing Psychologist Act – SB117 – Pocket veto
SB117 would move psychologists who are licensed to prescribe medications from the authority of the Board of Psychology to the Board of Medicine. SB117 was pocket vetoed on April 7.
Medical Malpractice Changes – SB523 – Signed into law by the governor April 7
SB523 was introduced late in the session and moved quickly. The bill makes changes to the damages caps under the Medical Malpractice Act for independent outpatient healthcare facilities. The bill differentiates between independent outpatient facilities and facilities owned or controlled by hospitals, and caps damages at $500,000 for a single claim and $1,000,000 for claims in the aggregate. SB523 was signed by the governor on April 7. Several other bills making other changes to the Medical Malpractice Act failed to pass either chamber.
Tax Changes – HB547 – Specific sections signed into law by the governor April 7; majority vetoed
HB547 is this legislative session’s omnibus tax bill. The legislation is the result of a compromise between the Senate and the House reached in a conference committee. For additional changes, detail and analysis of the bill see the updated fiscal impact report on the conference committee report which is available here. If signed into law, certain sections of HB547 go into effect July 1, 2023 or January 1, 2023. If the section does not have a specific effective date, the section goes into effect June 16, 2023.
UPDATE: Governor Grisham signed into law some sections of this year’s tax omnibus legislation, including the issuance of tax rebates, increasing the child income tax credit, enlarging the benefits of the film tax credit, and expanding the health practitioners GRT deduction. Nonetheless, the governor vetoed most of the legislation, including the decreases in the state GRT rate and reductions in the capital gains tax deduction. Some sections of HB547 were signed by the governor on April 7, with the majority of the bill being vetoed.
Gross Receipts Tax
Gross Receipts Tax and Compensating Tax Rate Reduction. Reduces the state gross receipts tax rate and compensating tax rate to 4.375% over four years. Between July 1, 2024 and July 1, 2025, both state rates will be initially reduced to 4.625%. Beginning on and after July 1, 2025, the state rates will be reduced to 4.50%. Beginning on and after July 1, 2026, the state rates will be reduced to 4.375%. However, the rate will revert back if there is a decline in gross receipts tax revenues during fiscal years 2027 through 2037. If gross receipts tax revenues are less than 95% of the gross receipts tax revenues for the previous fiscal year, the rates will revert to 4.875%. This section was vetoed on April 7.
Healthcare Practitioner Copayment or Deductible Gross Receipts Tax. Expands the medical services gross receipts tax deduction under Section 7-9-93 to add all receipts from a copayment or deductible paid by a patient to a healthcare practitioner for commercial contract services provided under health insurance. This section was signed into law on April 7. The effective date of this section is July 1, 2023.
Medicaid Renovation Deduction. Authorizes a gross receipts tax deduction to an eligible provider that installs equipment or real property modifications to a residence of a Medicaid recipient to allow that resident to live safely at home. This section was vetoed on April 7.
Childcare Provider Deduction. Creates a new gross receipts tax deduction for the sale of childcare services through either a licensed childcare assistance program or a for-profit prekindergarten provider. For licensed childcare services, the provider’s receipts must be pursuant to a contract or grant with the Early Childhood Education and Care Department and licensed by the Childcare Assistance Program. For a for-profit prekindergarten provider, the services must be pursuant to the Prekindergarten Act. This section was vetoed on April 7.
Dyed Diesel Fuel Exemption. Exempts the sale and use of dyed special fuels from the gross receipts and compensating tax when used for agricultural purposes. This section was vetoed on April 7.
Personal Income Tax
Income Tax Brackets. Adds one new tax bracket at 4.3% for those earning between $16,500 – $33,500, decreases the lowest marginal rate from 1.7% to 1.5%, and reconfigures the thresholds for all but the top rate, which remains unchanged. The changes in the brackets results in a reduction of taxes for all taxpayers with the largest change reduction for those earning less than $100,000 in taxable income. This section was vetoed on April 7.
Capital Gains Deduction. Significantly reduces the of the amount of capital gains that may be deducted from personal income tax under Section 7-2-34. Currently $1,000 or 40% of the taxpayer’s net capital gain income, whichever is greater, may be deducted. This bill changes the maximum a taxpayer may claim to $2,500 or 40% of up to $1 million of capital gain income from a sale of a New Mexico business. This section was vetoed on April 7.
Income Tax Rebates. Provides a temporary personal income tax rebate to be paid to all residents who filed state tax returns for tax year 2021. The rebate, which is available to those not claimed as dependents, is $500 for single filers and married individuals filing separate returns and $1,000 for married individuals filing joint returns, heads of household, and surviving spouses. This section was signed into law on April 7. The effective date of this section is April 1, 2023.
Child Income Tax Credit. Increases the amount of the child tax credit for those that earn $75,000 or less. For people with incomes from $0 to $25,000, the credit is increased from $175 to $600. For people with incomes from $25,000 to $50,000, the credit is increased from $150 to $400. For people with incomes from $50,000 to $75,000, the credit is increased from $125 to $200. This section was signed into law on April 7. It applies to taxable years before January 1, 2032.
Corporate Income Tax
Corporate Income Tax Rate. Replaces the state’s current two-tiered corporate income tax structure under Section 7-2A-5 with a single-tiered 5.9% flat rate of tax. This section was vetoed on April 7.
Apportionment of Business Income (Single-Sales Factor). Replaces the state’s three-factor formula under Section 7-4-10 with an opt-out single sales factor through tax year 2028. Following tax year 2028, all businesses will shift to single-sales. The sales factor is the ratio of sales in New Mexico divided by total sales. The legislation allows eligible businesses, defined as those with a cumulative investment in property in New Mexico exceeding $50 million, the option of retaining the three-factor formula, which is the average of property, payroll, and sales factors, or adopting a sales-only apportionment through tax year 2028. This section was vetoed on April 7.
Rural Healthcare Practitioner Tax Credit. Amends the rural healthcare practitioner tax credit under Section 7-2-18.22 to add several categories of health workers, such as registered nurses and social workers, to the list of approved practitioners eligible to receive the $3,000 annual credit. It also reduces the number of hours that a practitioner is required to provide service in a rural area to be eligible for the tax credit. This section was vetoed on April 7.
Electric Vehicle and Charging Unit Income Tax Credits. Creates a credit for the purchase of electric vehicles, as well as a credit for those who buy and install an electric vehicle charging unit. The legislation provides a refundable electric vehicle income tax credit of $2,500 for each electric vehicle purchase or $4,000 for households under 200% the federal poverty level. This section was vetoed on April 7.
Energy Storage Income Tax Credit. Creates a personal income tax credit of 40% of the cost of equipment and installation for an energy storage system on the taxpayer’s residential, agricultural, or commercial property. The maximum limit of the credit is $5,000 for residential systems and $150,000 for commercial and agricultural systems. This section was vetoed on April 7.
Geothermal Energy Generation Tax Credit. Creates the geothermal electricity generation income tax credits and companion gross receipts and compensating tax deductions. This personal income tax and corporate income tax credits are equal to 1.5 cents per kilowatt-hour of electricity generated in New Mexico in a taxable year. The joint personal/corporate income tax credit is capped at $5 million each calendar year. The gross receipts tax and compensation tax deductions apply to tangible personal property and installation services for equipment, transmission, and plant construction costs of the electrical energy generation geothermal facility. This section was vetoed on April 7.
Geothermal Ground-Coupled Heat Pump Credit. Reinstates the expired geothermal ground-coupled heat pump personal income and corporate income tax credits pursuant to Section 7-2-18.24. The credit rate remains at 30% of costs, with a maximum of $9,000 tax credit per installation. The cap for each credit is increased from $2 million to $4 million separately for the personal income tax and corporate income tax credits. This section was vetoed on April 7.
Film Tax Credits. Increases the benefits of the film tax credit, including raising the cap for films not by New Mexico film partners, expanding subsidies for nonresidents, and enhancing the benefit of filming in rural locations pursuant to Section 7-2F-2. This section was signed into law on April 7. These provisions apply to film production companies that commence principal photography for a film or commercial audiovisual product on or after July 1, 2023.
Industrial Revenue Bonds. Adds “energy storage facilities,” which means a facility that uses mechanical, chemical, thermal, kinetic or other processes to store energy from a zero carbon emission resource for release at a later time, to the definition of “project” under Section 3-32-1. This section was vetoed on April 7.
Liquor Excise Tax. Increases the liquor excise tax rates by 20% over current rates and distributes a portion of the revenue from the tax to a new alcohol harms alleviation fund. This section was vetoed on April 7.
Tobacco Excise Tax. Removes the 50 cents per cigar cap on the tobacco products tax on cigars. All cigars would be subject to the 25% tax applied to other tobacco products. This section also increases the tax on e-cigarettes, e-liquids, and closed-system cartridges to 31% of the product value. This section was vetoed on April 7.
Uniform Unclaimed Property Act – HB165 – Pocket veto
HB165 replaces the Uniform Unclaimed Property Act with the Revised Uniform Unclaimed Property Act. The revision includes technological changes, as well as new forms of property and time-relevant holding and dispersion requirements. The legislation clarifies tangible and intangible property, establishes events triggering presumed abandonment, revises dormancy periods, refines the duties of holders of unclaimed property, and adds security and confidentiality provisions. HB165 was pocket vetoed on April 7.
Pass-Through Entity Tax Credit – HB368 – Signed into law by the governor April 5
HB368 converts the income tax exemption on income subject to the entity-level tax to a credit for the owners of pass-through entities that elect to pay an entity-level tax. The legislation provides that the election to pay entity level tax by a pass-through entity will be binding on all owners of the electing pass-through entity. The Tax Cuts and Jobs Act (“TCJA”) capped the state and local tax deduction (“SALT”) for federal personal income tax purposes to $10,000 (married filing jointly) and $5,000 (married filing separate). Many states, including New Mexico, passed legislation to allow pass-through entities to pay and deduct SALT at the entity-level. SALT taxes paid by a pass-through entity are deductible from the entity’s income, taking the TCJA’s SALT cap out of play. The credit will keep some owners from paying more state tax while others pay less. The provisions of this bill apply to taxable years beginning on or after January 1, 2023. HB368 was signed by the governor on April 5 and goes into effect June 16, 2023.
Tax Administration Changes – SB146 – Signed into law by the governor March 30
SB146 makes several changes to the tax code recommended by the Taxation and Revenue Department (“TRD”), including (1) a taxpayer’s credit application must be complete before the TRD’s review period begins; (2) the incorporation of newer fraud technologies in New Mexico’s criminal tax fraud statute; and (3) rules pertaining to property valued by county assessors and TRD’s Property Tax Division. SB146 goes into effect July 1, 2023 after having been signed by the governor on March 30.
Tax Changes – SB147 – Signed into law by the governor March 30
SB147 is a Taxation and Revenue Department bill that makes cleanup changes to the tax code, including but not limited to the following. SB147 goes into effect July 1, 2023 after having been signed by the governor on March 30.
Disclosed Agency Definition. Provides a new definition of “disclosed agency,” which is a contested exclusion from gross receipts under the New Mexico Gross Receipts and Compensating Tax Act. The term was not statutorily defined before HB163 was signed into law last year. The revised definition removes references to “principal” and “agent.” The Department’s stated intent in proposing the definition is to make it easier for entities to set up disclosed agency arrangements and claim the agency exclusion.
Pass-Through Entities Income. Amends “base income” under the Corporate Income and Franchise Tax Act to include the amount of credit claimed and allowed for distributed net income of an entity level pass-through. The Department’s stated intent is that the change should have been included in the entity-level tax provisions passed last year.
Medical Insurance Pool. Provides that the portion of credit for assessments contributed to the New Mexico medical insurance pool that exceeds a member’s premium tax liability will not be refunded and will not be carried forward to subsequent taxable periods under Section 7-40-6.
Digital Goods Deduction. Adds a gross receipts tax deduction for licenses to use digital goods sold to a government entity when subsequently loaning those digital goods to the public. Public libraries who purchase licenses for e-books that are subsequently loaned to the general public will not be subject to gross receipts tax and governmental gross receipts tax.
Cannabis Excise Tax. Provides that receipts from cannabis excise tax are excluded from gross receipts. Additionally, the legislation provides for destination-based sourcing of cannabis excise tax to conform with the gross receipts tax sourcing rules.
American Rescue Plan Act Exemption. Exempts gross receipts tax receipts of health care providers, other than licensed hospitals, from payments by the federal American Rescue Plan Act of 2021 for the state Medicaid program to provide additional support for home and community-based services. The Department’s stated intent is to provide relief to rural providers and prevent the increase of costs for all recipients of healthcare in New Mexico.
Services Used for Governmental Entities Exemption. Exempts the use of services from compensating tax for a governmental entity.
Tribal Income Exemption. Amends Section NMSA 1978 Section 7-2-5.5 to change the definition of “living” on Indian lands to “domiciled” on Indian lands. The legislation is likely in response to Skeet v. New Mexico Taxation & Revenue Dep’t, No. A-1-CA-38577 (N.M. Ct. App. Nov. 28, 2022) (non-precedential).
Tax Exempt Organization Tax Audits – SB240 – Signed into law by the governor on March 30
SB240 changes the threshold from $250,000 of gross annual income a year to $750,000 of total expenses a year for tax-exempt organizations that are required to provide proof of an adequate accounting system and an annual audit prior to soliciting or receiving donations. The legislation amends the Charitable Solicitations Act by raising the threshold, from $500,000 in total revenue to $750,000 in total expenses, for organizations that currently are required to provide an annual audit. SB240, which has been signed by the governor, goes into effect January 1, 2024.
School District In-Lieu-Of-Taxes-Payments – SB474 – Signed into law by the governor April 5
SB474 amends the Industrial Revenue Bond Act and the County Industrial Revenue Bond Act to change how “payments in lieu of taxes” (PILT) from certain industrial revenue bonds and county industrial revenue bonds are distributed among school districts. The bill requires PILT revenues to be distributed as follows:
- 50% allocated equally among the school district in which the project is located;
- 40% allocated in proportion to the area of each school district within the
- municipality; and
- 10% allocated in proportion to the school district’s enrollment.
The former formula required equal shares to all school districts within the county or municipality of a calculated total based on the amount negotiated by the county or municipality sponsoring the IRB deal. SB474 was signed by the governor on April 5 and went into effect immediately.
DID NOT PASS
Several bills, including proposals to reduce gross receipts taxes for small businesses, increase the standard deduction for personal income tax, and provide tax relief for biodiesel, oil, and gas production and sales, were not included in this year’s tax package. Importantly, HB347 and HB69 did not pass. HB347 would have created a deduction for certain services, such as accounting or technology services, sold between businesses in a continued effort provide pyramiding relief. HB69 would have amended the angel investment tax credit to extend the expiration date and increase the expenditure cap.
Renewable Energy Office in State Land Office – HB95 – Became law upon passing both chambers
HB95 formally creates and maintains a renewable energy office within the State Land Office for the purposes of advancing the production and development of renewable energy. While the State Land Office already has a renewable energy office, one of the impacts stated in analysis of the pending legislation is that institutionalizing a renewable energy office could limit future land commissioners’ ability to dissolve the renewable energy office, which would make it easier to stop renewable energy projects. This pared-down substitute from the House Energy, Environment, and Natural Resources committee went on to pass both chambers. HB95 became law after having passed both chambers as it did not require signature from the governor; it goes into effect June 16, 2023.
Storage of Certain Radioactive Waste – HB122 / SB53 – SB53 was signed into law by the governor March 17; HB122 did not pass
While HB122 never made it out of its first committee assignment, its companion bill, SB53, passed both chambers and awaits the Governor’s signature. SB53 expands the membership of the radioactive waste consultation task force. The task force identifies impacts of new private and federal radioactive waste facilities and meets with the joint interim Radioactive and Hazardous Materials Committee. The definition of prohibited storage or disposal of certain materials is also changed. These bills introduce new language restricting the ability of the state or its political subdivisions to allow for the construction or operation of certain disposal facilities unless specified criteria are met. SB53 passed through both the Senate and the House. SB53 went into effect immediately upon the signature of the governor on March 17.
Generating Facility and Mine Remediation – HB142 – Signed into law by the governor April 5
HB142 enacts the San Juan Generating Station Facility and Mine Remediation and Restoration Study Act, requiring both the Energy, Minerals, and Natural Resources Department and the Department of the Environment to investigate, plan, oversee, monitor, and enforce the remediation and restoration of generating facilities and mines. An investigative report and attendant remediation and restoration plan would be due to the legislature by July 1, 2025. Respective departments have expressed fiscal concerns regarding the bill’s nonrecurring appropriations. HB142 passed the House of Representatives amended to remove future appropriations, and then passed the Senate. HB142 was signed by the governor on April 5 and goes into effect on June 16, 2023.
Broadband Infrastructure / State Land Broadband Easements – HB160 / SB97 – HB160 was signed into law by the governor April 5; SB97 did not pass
HB160, a companion bill to SB97, has passed both chambers. It allows the New Mexico Department of Transportation (“NMDOT”) to waive fair market value fees for right of way permits for broadband infrastructure installation intended to reach unserved and underserved locations. HB160 was signed by the governor on April 5 and goes into effect on June 16, 2023.
Use of Telecomm Fund for Rural Broadband – HB206 / SB155 – SB155 was signed into law by the governor March 30; HB206 did not pass
While HB206 never made it out of the House, SB155 has passed both chambers. SB155 amends the Rural Telecommunications Act by adding definitions for “access line,” “broadband internet access service,” and “consumer broadband-only loop.” The amendment also requires the Public Regulation Commission to make payments from the state rural universal service fund to incumbent rural telecommunications carriers that provide comparable retail alternative services in rural areas. As passed, the bill specifies access reduction support payment scales through and terminating at the end of 2026. If signed into law, SB155 goes into effect on June 16, 2023.
Geothermal Center and Fund – HB365 – Signed into law by the governor April 5
HB365 creates the Center for Excellence at the New Mexico Institute of Mining and Technology to develop and promote Geothermal Resources innovation, and adds a definition for “geothermal development project” to the existing Geothermal Resources Development Act. Committee amendments removing appropriation provision passed both chambers. HB365 goes into effect on June 16, 2023, having been signed by the governor on April 5.
Local Telecomm Carrier Changes – SB41 – Signed into law by the governor April 4
SB41 amends the New Mexico Telecommunications Act to require the New Mexico Public Regulation Commission to regulate large incumbent local exchange carriers (CenturyLink QC) in parity with rural incumbent local exchange carriers. It also redefines effective competition by limiting the Public Regulation Commission’s available criteria. SB41 was signed by the governor on April 4 and goes into effect on June 16, 2023.
Broadband Changes – SB452 – Signed into law by the governor April 4
SB452 is an omnibus piece of proposed legislation relating to broadband that, among other things, affects the Department of Information Technology Act, authorizes the sale or lease of broadband infrastructure, amends provisions of the Broadband Access and Expansion Act, and provides for the lease of the state-owned broadband network. The bill updates definitions, imposes new reporting requirements, and expands agency authority. SB452 goes into effect on July 1, 2023, having been signed by the governor on April 4.
DID NOT PASS
Natural Heritage Conservation Act Amendments – HB45 – Did not pass
HB45 would have amended the Natural Heritage Conservation Act by allowing the Energy, Minerals, and Natural Resources Department to acquire land and other interests in land for conservation purposes, as opposed to only conservation and agricultural easements. The bill was referred to the House Rural Development, Land Grands, and Cultural Affairs and House Energy, Environment, and Natural Resources Committees. HB45 did not pass in its committee.
Combined Cycle Natural Gas as Renewable – HB96 – Did not pass
HB96 would have amended the definition of “renewable energy resources” in the Rural Electric Cooperative Act as well as the Renewable Energy Act to include energy derived from natural gas combined cycle technology. Electric energy generated by use of any fossil fuel is specifically excluded from the current definition. The bill was tabled by the House Energy, Environment, and Natural Resources and the House Judiciary Committees. HB96 did not pass its committee.
Low-Income Public Utility Rates – HB218 – Did not pass
HB218 would have required the Public Regulation Commission to establish criteria for affordable rates which some electric and natural gas utility providers would have been required to provide to low-income residential customers. Amended and substitute versions of this bill made it through House committees and stalled on the House calendar. HB218 did not pass the House.
Oil and Gas Permit Applications – HB276 – Did not pass
HB276 would have implemented regulatory oversight of permit applicants under the Oil and Gas Act. HB276 did not pass its committee.
Distributed Generation Facility Supply Cap – SB56 – Did not pass
SB56 sought to remove the cap on the amount of electric energy a customer of a public utility can produce through use of renewable energy, e.g., residential solar panels. SB56 passed the Senate and was referred to two House committees. SB56 did not pass its either of its House committees.
Future Oil and Gas Royalty Rates – SB164 – Did not pass
SB164 aimed to increase the maximum royalty that oil producers pay from one-fifth to one-fourth of the value of the oil or gas removed. SB164 also included new provisions related to royalty payments for all wasted oil or gas that is vented, flared, spilled, released without controls, stolen, or otherwise lost. SB164 did not advance in the Senate.
Local Choice Energy Act – SB165 – Did not pass
SB165 sought to enact the Local Choice Energy Act, authorizing customers of a public utility or rural electric cooperative to aggregate electric loads in a local community as a choice energy provider. Plans for implementing such a program would have been required to be adopted by the respective political subdivisions and presented to the New Mexico Public Regulation Commission prior to going into service. SB165 did not pass its committees.
Strategic Water Reserve – SB167 – Did not pass
SB167 sought to appropriate $25 million from the general fund for the Interstate Stream Commission within the Office of the State Engineer for expenditure for the Strategic Water Reserve. SB167 did not pass its committees.
Retail Distributed Generation – SB266 – Did not pass
SB266 would have amended the Renewable Energy Act to require public utilities to include “retail distributed generation” in their electric energy supply portfolios. SB266 did not advance in the Senate.
Broadband Company Redundant Cable Lines – SB320 – Did not pass
SB320 required middle mile broadband service operating companies to maintain a redundant cable line. SB320 did not advance in the Senate.
Renewable Portfolio Standards Calculation – SB326 – Did not pass
SB326 would have amended the Renewable Energy Act by clarifying the calculation of renewable portfolio standards by including energy consumed by the qualifying generator facility. SB326 did not pass its committee.
Low-Income Solar Act – SB432 – Did not pass
SB432 would have required the Public Regulation Commission (“PRC”) to adopt rules related to low income solar credits by 2023 year-end. Enumerated criteria include virtual net metering, production credits are carried forward, varied rate class definitions, and reductions in solar system taxation valuation. SB432 did not pass its committee.
PRC Changes – SB434 – Did not pass
SB434 was intended to clarify that two of the three-member Public Regulation Commission would constitute a quorum for public business. Public business would have explicitly excluded hiring for certain roles, organizing office responsibilities, and applying for grants. SB434 also excluded certain internal communications from constituting a quorum. SB434 did not pass its committee.
Energy Storage Development and Planning – SB456 – Did not pass
SB456 would have required certain utilities to submit energy system storage plans to the New Mexico Public Regulation Commission for approval, whether through construction or acquisition. The bill passed the Senate. SB456 did not make it to a vote on the House Calendar.