2021 Legislative Session Report

In total, there were roughly 850 bills introduced during this modified 60-day session.  While that number is about half of what we would expect during a normal 60-day session, there were still a significant number of impactful initiatives.  Among the most relevant to the tourism industry were: 1) Paid Sick Leave; 2) Increases to the Corporate Income Tax rate; 3) a 1% increase to the Health Insurance Tax;       4) Per Diem increases; 5) Private Right of Action; 6) Worker’s Comp claims for workplace COVID contraction; 7) Broad alcohol licensure reform; 8) Revisions to the Small Business Loan Recovery Act; 9) Tax Holiday for Restaurants and Bars; 10) Minimum Wage Increases; 11) Exempt Social Security Income from GRT; 12) efforts to promote solvency of the Unemployed Insurance Fund; 13) a number of bills to promote the expansion and development of broadband infrastructure; 14) Recreational Cannabis;  and, 15) a number of other COVID recovery initiatives.

With respect to the state budget, the legislature passed a $7.44 billion budget for FY22, which is an increase of 4.9% over the current budget.  Much of the $344 million increase, will be used to restore general fund dollars to costs temporarily covered by federal funds and to maximize federal matching programs for, among other things, infrastructure improvement and Medicaid reimbursement rates.  The proposed budget will also leave New Mexico with healthy general fund reserves for FY 22 of roughly $1.77 billion, or almost 24% over current budget expenditures. The state and local governments will also be eligible for significant Federal COVID relief funds through the American Rescue Plan that will further supplement the $7.44 billion budget.

Of note, HB 2 contains: 1) a one-time appropriation of $7 million in general fund dollars and another $10 million in federal funds to the Tourism Department; 2) just over $21 million for the Tourism Department’s FY 21 budget, with $12.5 million for marketing and promotion and $1.4 million for the NM Magazine;  3) $85 million appropriation of new federal funding for broadband related infrastructure and planning efforts that supplanted state funds previously intended to be used for said purposes; and, 4) appropriation of new federal funds of $100 million for lottery scholarships, $100 million for the LEDA closing funds, $200 million for roads, and $600 million for the state’s depleted unemployment fund.

Given the nature of the 2021 session and our limited ability to interact with members, the session was not as bad as it could have been given the significant number of negatively impactful bills.  However, this session should serve as a wake-up call to the business community that they need to collectively engage more in the political process and work cooperatively to re-establish a more business friendly presence in the Legislature.  While Paid Sick leave is probably the most significant and negative bill that passed, we should have one more chance to propose amendments to the ACT during the next legislative session because the implementation date is July 1, 2022.  In summary, while we spent a majority of our time on defense this session, there were a few bright spots that will hopefully result in broad and long-lasting benefits to the tourism industry.

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