Issue 1 • 2022 9 n EXECUTIVE VICE PRESIDENT’S MESSAGE continued on page 10 The Legislature approved $258 million for projects for New Mexico higher education institutions, senior centers, and libraries. 2022 Legislative Session Update The 2022 thirty-day legislature adjourned on February 17 with some final-day fireworks. The Senate was subjected to a two-hour filibuster, resulting in the death of voting rights legislation. On that same day, in a total surprise to most, House Speaker Brian Egolf announced that he would not seek re-election, and Governor Grisham lifted the state’s mask mandate effective immediately. As anticipated, the Governor signed the General Appropriations Act (HB 2). The legislature approved an $8.5 billion budget for fiscal year 2023 (beginning July 1, 2022), which represents a 14% increase over the current year’s budget. The budget bill raises compensation for all state employees, including teachers. The bill also increases the hourly minimum wage for state employees to $15 per hour. The state surplus account is at a meteoric high. However, in a totally unanticipated move, the Governor vetoed a supplemental appropriation bill (SB 48) in its entirety. The bill called for a 33% increase in compensation for judges and authorized $50 million for projects and programs selected by individual legislators. For SB 48, house members were allocated $360,000, and senators were given $600,000. Most legislators were incensed by the veto and called for legislative leadership to convene an extraordinary session to override the governor’s veto. Ultimately, Governor Grisham called the legislature into special session on April 5, and the majority of the supplemental appropriations previously vetoed were enacted in a revised bill and approved. A number of prominent bills that passed the 2022 Legislature and were signed by the governor were bills that had been considered, unsuccessfully, for several years. These included capping interest on small loans from 175% to 36%, a package of tax revision bills that include a one-time tax rebate, refundable child income tax credits, a small reduction in the state’s gross receipts tax, exemption of Social Security income from state income tax for all but the highest-income New Mexicans, and five-year income tax relief for military pensioners. Bills Signed Into Law • Capital Outlay Projects (SB 212): The Legislature approved $828 million for capital projects around the state. • General Obligation Bonds (HB 153): The Legislature approved $258 million for projects for New Mexico higher education institutions, senior centers, and libraries. Unlike the capital outlay bill, these projects will be funded by general obligation bonds backed by property taxes and would require statewide voter approval in the November general election. • Interest Rate Cap on Small Loans (HB 152): The new law caps the annual interest rates of small loans at 36%, down from 175%. The bill allows an additional 5% origination fee for loans of less than $500. Banks are exempt from the provisions of the bill. • Affordable Housing (SB 134): The bill annually allocates 2.5% of severance tax bond capacity for the New Mexico Housing Trust Fund, administered by the NM Mortgage Finance Authority, to build, rehabilitate, and/or weatherize homes for low-income New Mexicans. It is estimated that $27 million will be available for the Housing Trust Fund in 2024. • Tax Package (HB 163): This very important bill provides: • A refundable child tax credit of up to $175 per child for tax years 2023 through 2027 • A one-time, refundable income tax rebate of $500 for married couples filing joint returns with incomes under $150,000 and $250 for single filers with incomes under $75,000 • A five-year income tax exemption for armed forces retirees, starting at $10,000 of military retirement income in 2022 and rising to $30,000 of retirement income in the tax year 2026 • A one-time $1,000 refundable income tax credit for the tax year 2022 for full-time hospital nurses • An extension of the solar market tax credit, worth 10% of the purchase and installation cost of a solar power system • A new gross receipts tax deduction for certain professional services, including legal and accounting, sold to manufacturers; this will help reduce tax “pyramiding” by about $5 million per year and make New Mexico businesses more competitive • Eliminates taxation on social security, saving New Mexico seniors over $84 million next year; the bill includes a cap for exemption eligibility of $100,000 for single filers and $150,000 for married couples filing jointly • Cuts the state’s gross receipts tax rate by an eighth of a percent starting July 1, 2022, and ramps up to a quarter-percent reduction on July 1, 2023, saving New Mexico businesses and consumers $200 million when fully implemented In all, HB 163 is expected to provide about $400 million of recurring tax relief, benefitting all New Mexicans. • Taxation Pass-Through Entities (HB 102): A major component of the federal 2017 Tax Cuts and Jobs Act was the $10,000 limit on the amount of state and local taxes an individual may deduct for regular federal income tax
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