This short 30-day, financially-focused session was about as busy as expected given the current political climate. Though just under 700 bills were introduced, only a fraction actually passed. Though relatively quiet, this session was productive for the tourism and lodging industry because several important measures were passed while no negative pieces of legislation made it to the Governor’s desk. Additionally, the 2018 Tourism Day in Santa Fe yielded positive visibility for the industry through successful advocacy and outreach by members.
Several notable pieces of legislation, detailed below, were the “Cost Segregation” bills, the “Small Cell” bills and the “Spaceport Disclosure” bill. Each measure garnered broad support from business communities throughout the state, including that of the New Mexico Hospitality Association. Another piece of legislation the industry actively supported was the “Broadband Tax Credit” that passed the House but failed in the Senate due to a shortage of time and the lack of an omnibus tax package this session. Though several comprehensive tax packages were considered, none passed because Democrats and Republicans could not reach a consensus.
The most notable development of the 2018 Legislative Session was the availability of about $200 million in “new money” that was distributed throughout this years $6.3 billion budget. A majority of that “new money” went to cover the 2% to 2.5% raises given to all state employees who have had flat salaries since 2010, and to cover the cost of increased funding to public safety entities like District Attorney offices and Judiciary. However, with the availability of additional funds the New Mexico Tourism Department did see an overall increase it its budget of about $1 million, which does represent a substantial increase over the Department’s FY 18 budget. In addition, a one-time special appropriation of $300,000 for Special Olympics New Mexico was also included.
With respect to negative legislation, nothing impactful was passed, but several problematic bills were introduced. Most negative initiatives failed quickly because they were not germane to financial issues and could not be heard during this short session. However, the 2019 Legislative Session will almost certainly be much more active with a new Governor taking office. While we will have the opportunity to push a variety of beneficial initiatives like the Lodger’s Tax reform and GRT reform for internet-based booking platforms, next year the industry will also have to defend against numerous anti-business initiatives that could have a negative impact on the interests of NMHA membership and the industry as a whole.
With the above in mind, we will need to work diligently during the interim to maintain current relationships with elected officials and build new relationships with candidates that are well positioned to win their elections. The continuation of the New Mexico True brand and recent increases in the Tourism Department’s budget are also by no means guaranteed with a new governor coming into office. during the interim, the industry must decide how best to advocate for the continuation of a healthy, strong and well-funded Tourism Department with an effective marking campaign.
Notable Legislation that Passed – All of these bills were either supported or closely monitored:
-HB 2 (FY 19 Budget) – Though the Governor’s Budget proposal requested a $3.5 million increase to the New Mexico Tourism Department for marketing in San Francisco, HB 2 and HB 3 allocated just $1 million of the requested $3.5 for general marketing. The bill came out of the House with $750,000 increase appropriated to the Department for general marketing and the Senate added $250,000 to round out the $1 million dollar increase, which took the reoccurring marketing budget from about $12.7 million to $13.7 million. Requests form SB 130 for a one-time appropriation of $300,000 to cover the costs of promoting and preparing for the Special Olympics were also added to the Department’s budget. While we actively lobbied members of House Appropriation and Finance (HAFC) as well as Senate Finance (SFC) Committees for more money throughout the budget making process, the $3.5 to enter the San Francisco market was seen as too large of an ask given the state’s significant public safety issues and flat government employee salaries over the last 8 years. Legislators also did not feel the $3.5 million to advertise in San Francisco was sufficiently vetted or justified by the Department given that existing “fly markets” have not reached a point of saturation. Further, there simply was not enough time to formulate and implement well-researched and reasoned campaign to support the San Francisco given the short timeframe between the Governor’s recommendations and the relevant legislative budget hearings. However, it is important to recognize that adding $1 million dollars to the Tourism Department’s marketing budget represents an estimated 8% increase, which is substantial.
-HB 245 and SB 215 “Construction Material” in Gross Receipts Act (Cost segregation) – TRD changed their policy on taxes regarding public entities and projects with IRBs which would have exposed several entities, like the Hotel Chaco, to significant tax burdens through audits that would have clawed back 6 years. This bill was proposed as a fix, and through a coalition of business-based association, local governments and state entities, we helped push these bill through the legislative process. The House version of the bill was passed and is awaiting signature by the Governor, which is expected given that the coalition worked with Tax and Rev to come up with the fix. Support.
-HB 244 and SB 21 (Retire-in-New Mexico Campaign – appropriation goes to EDD) – Neither of these bills passed but an independent one-time appropriation of $150,000 was placed into HB 2 for this campaign. Monitor.
-SB 14 (Wireless Consumer Advanced Infrastructure – AT&T Bill) – Bill to promote the implementation of small cell technology convert from 4G to 5G on phones. This bill passed both chambers and is expected to be signed into law. Support.
-SB 98 (Commercial Aerospace Protection Act) – This is the confidentiality bill that seeks to protect some spaceport operations/tenants from public disclosure. This bill had some significant opposition from government transparency groups but passed through Senate Judiciary with key amendments that led to its passage. Support.
-HB 197 (Regional Air Center Special Economic District) – This bill allows for the formation of authorities to own, operate, and govern districts encompassing an industrial air center and related property for the purposes of capitalizing on the economic potential of a former U.S. military base and stimulating aviation related activity and investment. After being substantially amended in both Senate and House committees, this legislation was passed and is on the Governor’s desk awaiting signature. Support.
Notable Legislation that did NOT Pass – Some of these bills were actively supported by the Association and some opposed:
-SJM 26 (Spaceport Flight Marketing Task Force) – Rather than pursing and independent appropriation to Tourism Department to promote Inaugural Virgin Galactic Launch, this memorial was introduced. The Memorial sought to form a taskforce of interested parties led by the Spaceport Ambassadors to evaluate the need for a comprehensive marketing plan to promote Virgin Galactic’s Inaugural Launch. The Spaceport itself felt this initiative was unneeded and asked that it not be pursued. Support.
-Minimum Wage Bills – A variety of minimum wage bills were introduced but none got any significant traction this year; however, we will see numerous measure like this next year. Opposed.
-HB 305 (Hotel Employee Panic Buttons) – This was not germane and went nowhere this session. However, we will see this again next year. Opposed.
-HB 128 (Broadband Component Gross Receipts – Century Link’s bill) – This bill was initially tabled in House Tax and Rev but in the last few days of the Session it was taken off the table and passed through the House with broad support. Unfortunately, the clock ran out for this bill and it did not get a hearing in Sentate Finance. This is a bill we will see again next year and during the interim we will work with CenturyLink to ensure that NMHA supports any future efforts related to passage of this legislation. Support.
-HB 212 (Family Friendly Workplace Tax Credit) – This is a tax credit for small business (50 and under) to encourage them to adopt family friendly policies. The Association of Commerce and Industry (ACI) drafted this bill to help counter the mandates. The bill got through its first committee but was tabled in Tax & Revenue due to its fiscal impact and did not make it into a larger tax package because an omnibus tax bill was not advanced this session. This one should be vetted during the interim and pursued again in 2019 as a priority piece of legislation. Support.
-SB 151 (Enhanced Enterprise Zone Act) – This bill allows cities to designate certain areas such as downtown districts as enterprise zones and freeze property taxes for ten years to incentive private investment and revitalization. This bill had too many committee assignments and not enough time to pass. Support.
-HB 189 (State Law Over Private Sector Employment Law) – This is preemption of local labor laws related to paid sick leave and scheduling mandates. Support.
All in all, the 2018 Legislative Session was a successful campaign for the New Mexico tourism and lodging industry. Some of those successes, namely the increased budget for the New Mexico Tourism Department, will open to the door for more substantial gains in 2019; see detailed list of bills below. The 2019 Legislative Session also promises to be very active and will provide numerous opportunities to pursue beneficial legislation and give rise to the need to defend again potentially damaging initiatives.
Thank you to the Government Affairs Committee for their leadership, our lobbyist Jason Weaks and our membership for working with their legislators to support the growth of our industry!
If you are interested in joining the association’s Government Affairs Committee and participate in the process, please login to your membership portal, the MIC, and sign up to join the committee. Click HERE. If you need assistance in logging into NMHA’s members only MIC, please contact Cody Johnson.