Pub. 17 2020 Issue 3

Issue 3 • 2020 7 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S protected not by the Federal Deposit Insurance Corporation (FDIC) but by taxpayers. The U.S. has nearly 5,300 banks operating more than 86,000 branches securing $13.5 trillion in deposits. The regulated commercial banking sector has a long track record of meeting the needs of small-dollar borrowers, consumer depositors and large- scale enterprises alike. • The Bank of North Dakota, a bank with approximately $7 billion in assets, is the only state-chartered public bank currently functioning in the United States. The bank was chartered in 1919 pursuant to an explicit and special chartering authority contained in the North Dakota Constitution that is imple- mented via a speci c North Dakota state statutory authority. All depos- its of the bank are guaranteed by the state itself and not by the FDIC. There have been no states that have followed the North Dakota model in 101 years. • Public banks may duplicate the current financial institution mar - ketplace. There is no evidence that the current market is failing to meet consumer banking needs. In fact, the state already provides many of the products and services offered by commercial banks through state government agencies and quasi- governmental agencies to include: • The legislature created the New Mexico Finance Authority to nance infrastructure projects for the state’s counties and cities and certain departments of state gov- ernment. The objective is to provide low-cost nancing for borrowers who might not otherwise be able to access the tax-exempt bond market on a cost-effective basis. • The New Mexico Mortgage Finance Authority is a quasi-governmental entity that provides nancing to make quality a ordable housing and other related services avail- able to low and moderate-income New Mexicans. • The legislature created the New Mexico Small Business Invest- ment Corporation to support small businesses throughout the state by providing equity or debt capital to nance expansion, creating and retaining jobs, and enhancing New Mexico communities’ economic liveli- hood by investing in local companies. • New Mexico Hospital Equipment Loan Council was created by the legislature to provide the health care industry with access to low- cost capital through tax-exempt and taxable bonds, loans and leases. Both nonprofit and for-profit health care facilities qualify for financing through these bonds. • The state treasurer provides bank- ing assistance and services to state agencies by accepting money for de- posit through the fiscal agent bank, processing withdrawals, reconciling all bank transactions and balanc- es, and managing securities used as collateral per Federal Reserve requirements. The State Treasurer’s O ce acts as the state’s bank and records the receipt and disburse- ment of all state moneys de ned by statute as being in the custody of or payable to the treasurer. • The State Investment Council man- ages and invents the state's Land Grant Permanent Fund and the Severance Tax Permanent Fund and also invests funds for other govern- mental entities. • Public banks may duplicate the current financial institution mar- ketplace. There is no evidence that the current market is failing to meet banking needs. Social Security Income Tax Exemption: Several bills are likely to be introduced to exempt Social Security retirement income from state personal income tax. New Mexico is one of 13 states that taxes Social Security benefits. That tax may be a red flag to retirees in deciding where to relocate for their retirement years. Rent Control: New Mexico current- ly prohibits state political subdivisions and any home rule municipality from enacting ordinances or resolutions that control or would have the effect of con - trolling rental rates for privately owned property. A bill is likely to be introduced in 2021 to repeal that law. A repeal of that law was introduced during the 2020 Special Session but not considered. Financial Literacy: A legislative recommendation making a class in financial literacy or personal finance a graduation requirement for New Mexico public high school students. Nationally, 21 states, not including New Mexico, have made a personal finance or finan - cial literacy course a high school gradua- tion requirement. Courses teach budget- ing, saving, investing, credit scores and borrowing. Courses are often tailored to be relevant to students focusing on subjects like the cost of college and stu- dent loans. Since 2008, financial literacy has to be available as an elective course for high school students in New Mexico public schools. Only 10,722 of the state’s 97,076 high school students completed one of these classes during the 2019- 2020 school year. Cannabis Regulation Act: The 2021 Legislature will consider legisla- tion to provide a comprehensive plan for regulation and licensing of commercial cannabis production and distribution, sale and consumption of cannabis by New Mexicans age 21 or older. The proposal will likely impose a cannabis excise tax applied to the price paid for cannabis. The standard gross receipts tax would also be charged on each trans- action. It is estimated that the program may raise between $50-60 million for the state’s general fund. Residential Evictions: We expect legislation will be introduced to provide that for the duration of a public health emergency as declared by an executive order promulgated by the Governor, and for 12 months after the termination of the executive order, no landlord may evict a residential tenant for failure to pay rent. A similar proposal was intro- duced and not adopted during the 2020 Special Session. Small Business Recovery Act of 2020: Legislators enacted a law in June’s Special Session to create a $400 million loan program intended to offer low-interest loans to help businesses and nonprofit withstand the COVID-19 public health restrictions that shut down or restricted businesses. The law is due to sunset on Dec. 31, 2020. Sena- tor Jacob Candelaria intends to intro- duce legislation next session that would extend the program through next year. He also intends to make several other modifications to the act to encourage greater small business participation. n