Associated Documents
CWA’s Legislative Agenda 2010
January 20th, 2010
Thanks to AFSCME Council 18 Political Coordinator, Carter Bundy
New Mexico’s 2010 Legislative Session begins on Tuesday, January 19, and runs through Thursday, February 18. In even-numbered years, the legislative session is limited to the budget and items on the governor's call.
It appears that with a few exceptions, everything we're doing will revolve around trying to increase revenues and limiting cuts to state and university employees (as well as holding cities, counties, and utilities harmless).
1. No layoffs, furloughs, or additional pay cuts. As the Bush recession lingers on, public employees across America are facing layoffs. New Mexico faces about a $700 million deficit just for Fiscal Year 2011 (July 1, 2010-June 30, 2011) right now, which could spell disaster for current employees. Fortunately, we have heard from the administration, the Lt. Governor, and leaders in both houses that they are going to take every possible step to avoid layoffs.
Every $100 million deficit represents approximately 2,000 state or university employee jobs. There is absolutely no way to avoid hundreds or thousands of layoffs without increasing revenues. CWA is part of a coalition called Better Choices New Mexico (BCNM) which has been working diligently during the last year to develop revenue options that do as little as possible to slow economic growth while generating the funds necessary to keep the state's critical operations going.
BCNM is not taking a position on the Gross Receipts Tax (GRT) changes discussed below, and GRT increases are certainly are some of our least favorite revenue alternatives. Some may become necessary for us to support, though, if we're going to ensure the state has enough resources to avoid even more huge cuts to agencies and universities.
The sections below generate about $923 million/year, and there's zero chance that each and every one of those items, at the full amount, will pass. So it's almost a certainty that there will have to be some GRT changes if we're going to close the deficit with no layoffs.
Here is a brief list of some of the major revenue options, and their approximate dollar values, which we should advocate at the session. It will be difficult to pass even a few of these options, but if they were to all go through, we'd generate about an extra $1.6 billion/year.
A. Restoring personal income tax for the very wealthy and investors (total $339 million)
• Repeal all of the 2003 personal income tax breaks for all income over $100,000. This will generate approximately $246 million/year.
• Reduce the capital gains deduction from 50% to 25%. This will generate approximately $28 million/year.
• Close use of double deduction of state and local taxes by itemized filers. Also known as the "PIT (personal income tax) Add-Back", this will generate about $65 million.
B. Voluntary "sin" taxes on products that drain the general fund (total $100 million)
• Raise cigarette tax 5 cents/cigarette ($1.00/pack). Would keep differential between pueblos and rest of state. This will generate $33 million/year.
• Raise tax on other tobacco products by similar percentage. This will generate $7 million/year.
• Increase alcohol taxes on beer, wine, and spirits so that they are taxed equally at 10 cents/drink (total--would only be about 6 cents additional on beer and 3 cents additional on wine and spirits). Would keep differential between microbreweries and small wineries and other producers. This will generate $42 million/year.
• Restore Gross Receipts Tax on candy and added-sugar drinks. Will generate $18 million/year.
C. Close out-of-state corporate loopholes by enacting combined reporting (total $14 million for FY '11, but expected to double or more as corporate profits rebound)
D. Changes to energy tax policy (total $244 million)
• Without changing taxes on oil and gas, shifting the amount going to general fund from some of permanent severance tax fund by a quarter cent will generate $23 million/year.
• Equalizing the coal surtax on all coal providers--currently some pay much less than others for technical reasons--will generate $23 million/year.
• Instituting graduated increases for oil and natural gas so that tax is lower if price per barrel or cubic foot is lower and higher if price is higher will generate $130 million/year.
• Imposing a new diesel/special fuels tax, affecting almost entirely out-of-state companies, will generate $68 million/year.
E. Miscellaneous tax process changes and loophole closing (total $30 million)
• Withholding taxes on non-residents instead of waiting for them to voluntarily pay at end of tax year will generate $15 million/year.
• Requiring bonding by all contractors will generate $11 million/year.
• Other small changes in tax collection processes including "direct remittance" will generate $4 million/year.
F. Excise and premium changes (total $196 million).
• Raising motor vehicle excise tax from 3% to match GRT on all other items, which averages 7.1% statewide, will generate $136 million/year.
• Raising the health premium tax from 3% to match GRT on all other items, which averages 7.1% statewide, will generate $60 million/year.
G. GRT changes. These are generally more controversial for workers because they tend to be more regressive (impacting lower and middle class families to a greater percentage than the very wealthy). Given that it is highly unlikely that all of the above revenue enhancements, or even a majority of them, will pass, some part of these GRT changes may be needed to stave off thousands of layoffs (total $734 million)
• Restoring GRT on all food will generate $228 million/year.
• Increasing the general GRT by 1% will generate $506 million/year.
2. Protecting all public employee pensions. Republicans in both houses and even significant numbers of Democrats are looking to end PERA and ERA as we know them. It’s true that each fund has been down since mid-2008, as has most every fund invested in stocks, but it’s also true that PERA and ERA play for the long haul.
Our position is that we should not base something as important as benefits on one bad year. When the market goes up, no one proposes that employees pay less into their funds.
This issue is not likely to surface during this budget session, but if it does, we are prepared to fight for our current retirees, current members, and future members. Most likely, this will be one of our most important bills for the 2011 session, as there are some default changes we oppose that go into place on July 1, 2011 if the legislature does not act during that session.
3. Preserving current health benefits. Another way the state may seek to save money is by reducing our health benefits. Our 80/20 and 70/30 premium split was negotiated, but the legislature could alter this through legislation. We haven’t heard of any specific plans to attack our health benefits, but in a year like this, everything is possible.
4. Securing retiree health care. The Retiree Health Care Authority is in bad shape, and was even before the market crash. Last session we passed legislation increasing contributions to the plan starting in FY '11. The good news is that 2/3 of those increases are coming directly from the employer and not the employees.
5. Protecting state employee health plans from pooling with high-risk uninsured. While CWA supports universal health coverage, we don’t want it to be on the backs of state employees. There are multiple plans being proposed that would allow voluntary buy-in to the state plan from certain businesses and individuals. As we learn the details and find out what, if any, protections there are for state employees, we will take a position accordingly.
6. Tax Expenditure Budget legislation. Much of the state’s revenue is lost, or spent, on tax breaks for big corporations or the well-connected. This legislation opens up special tax breaks for review each fiscal year, meaning that each year we will have a better chance of enhancing revenues by going after outdated or inefficient tax breaks. Especially given that we face several tough budget years, this could prove very helpful.
7. Fighting against corporate giveaways. In tough economic times, where we barely have enough money to keep our members’ jobs and provide critical services to citizens, it’s an outrage that large corporations, especially developers, are looking for special handouts and additional tax breaks. Tax increment financing is the most likely way that corporations will try to siphon off billions of dollars of general fund money, and it’s important that all public employee organizations join the fight to keep us as fiscally sound as possible.
8. Domestic partnership. CWA supports equal rights for non-married people, and this is an important piece of legislation to get health and retirement benefits to workers and their families--including many of our members and retirees.
9. Keep fair share. You pay full union dues, but free-riders in the bargaining unit get the exact same benefits, contract rights, grievance help, and political/legislative support that you do. Since the union is legally obligated to help free-riders as much as regular members, the least they can do is chip in for some of the representation help they get. We've heard rumors of a move to end fair share, and we'll fight it tooth and nail because it's just not right.
10. End double dipping. Not only does double dipping cost the PERA fund about $300 million extra dollars for every 2,000 double dippers (about the number of double dippers right now), but it cost the general fund an extra $8-$10 million a year—almost the exact same amount as the furloughs generated.
Further, if we end double dipping for current double dippers, a reasonable estimate is that about half of the double dippers in state employment (600) would retire, and only half of those positions within the state (300) would need to be filled. That means about an extra $30 million/year for the state general funds.
11. Use capital outlay for the general fund. While building new recreation centers and senior centers is nice, it's something of a luxury. Given that capital outlay money in turn results in (usually) cities and counties having to staff them out of their operating funds, it makes no sense to add to local government deficits right now. When the economy picks up, capital outlay is good, but for right now, we need that money in the general fund.
