• Gross receipts tax is boosted by inflation and construction. Geographic concentration risks and disproportionate gains remain a concern. • Personal income taxes are moving sideways; employment weakness is translating into slow growth. • Corporate income taxes have fallen, but pass-through entity payments are ballooning. • Higher oil prices are translating into higher revenues. A $1 change in the annual average price of oil in New Mexico has a $56.45 million impact on total state revenue. • Investment earnings remain the bright spot, providing the fast-growing and most stable revenues to the budget. • Revenues falling below their trend, except for investments that are lifting revenues. • Recession probabilities are down from recent levels. • Oil prices are holding up for now, but lower prices could arrive quickly. • Steep earmarks are causing cliff effects that cut revenue growth nearly in half. • Total revenues are sufficient for a short-term downturn. • Total reserves are overinflated with funds used for other purposes. • Inflation remains a key source of uncertainty in the revenue forecast. Higher inflation can suppress real economic activity, reducing incomes and spending and creating downside risks for state revenues. At the same time, inflation can temporarily boost nominal tax collections, presenting an upside in the near-term. 2027 Legislation We anticipate that the following legislation will be introduced during the 2027 legislative session. Interchange Fees In 2025, Illinois became the first state to enact the Interchange Fee Prohibition Act, a law that exempts merchants from paying interchange fees on sales tax and tips included in credit and debit card transactions. The act is scheduled to go into effect on July 1, 2027. In 2026, the Colorado Legislature passed a bill prohibiting the collection of interchange fees for sales taxes. Specifically, the legislation would prohibit the payment card networks and financial institutions with more than $60 billion in assets from charging interchange fees on sales taxes. It was also amended to mandate that retailers with at least 500 employees use the savings to reduce prices or boost their employee wages and benefits. The bill was vetoed by the Colorado Governor. In 2025, HB 476 was not introduced in the New Mexico House of Representatives. The bill would have prohibited interchange fees on taxes and gratuities. The bill was not enacted. We anticipate a similar bill will be introduced in 2027. State Bank For no fewer than 10 sessions, a Public Bank Acts has been introduced in the Legislature but not adopted. Without discussing the details contained in prior public bank acts, the NMBA has noted the following points in its opposition to the public bank: • What market failures or gaps exist that would require the formation of a public bank? • The implications of creating a public bank pose risks to New Mexico’s taxpayers and would saddle the state with high, unwarranted costs to replicate a highly competitive, regulated and federally insured banking system that exists in communities across New Mexico. • Starting a public bank would needlessly consume public funds that could be used for health and safety, infrastructure and community development when financial services are already provided by taxpaying private-sector banks operating in a highly competitive marketplace. We anticipate a Public Bank Act will be introduced in 2027. AI Regulation In 2025, Rep. Christine Chandler (D-Los Alamos) introduced HB 60, the Artificial Intelligence Act, a regulatory framework for AI systems. The Act primarily focused on protecting consumers from algorithmic discrimination by establishing developer responsibilities, deployer risk-management requirements, legal-enforcement parameters and protective provisions. Developers were to publicly list all high-risk AI systems they offer and explain their risk mitigation measures. Deployers of an AI system were required to use reasonable care to protect consumers from any known or foreseeable risk of algorithmic discrimination. We anticipate a bill similar to HB 60 will be introduced in 2027. Conservator Liability Under current law, a conservator of an estate cannot be released from liability for legal actions arising from the conservatorship. We anticipate a bill will be introduced in 2027 to provide a limitation on liability for conservators similar to a bill introduced in 2025 (HB 125). Other Issues Likely to be Considered Other issues that are likely to be addressed by the 2027 Legislature include: • Tort reform • Paid family and medical leave • Affordable housing • Medicaid • SNAP • Medical compacts 7
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