2022 Legislative Roundup
17 Feb 2022
The Regular Session of the 2022 New Mexico Legislature officially adjourned at Noon on Thursday, February 17. During this year’s unique legislative session 501 bills and 136 memorials and joint resolutions were introduced.
The 2022 Legislative Session ended with a surprise announcement from Speaker of the House Brian Egolf that he will not seek reelection. According to the Speaker, this is the first time in 60 years that an individual has voluntarily stepped down from the Speaker position.
Below is a brief synopsis of the outcomes of several key economic development related legislation.
Passed the Legislature and Awaiting Action by the Governor
House Bill 7 (Opportunity Enterprise Act), sponsored by Representative Meredith Dixon, passed the House of Representatives (36-28) and Senate (24-13). The legislation helps address the lack of available quality commercial and industrial space across New Mexico, which remains an economic barrier for many communities, as outlined by the NMIDEA Policy Brief: Industrial Space Development. The bill creates a funding mechanism within the New Mexico Finance Authority to provide gap financing for the development of commerical and industrial space to further the economic development objectives of the state. The state can either finance the entire project, which upon completion it will continue to own, but can lease it to a private partner or the state can provide a low-interest loan to a private sector partner.
House Bill 104 (Venture Capital Program Act), sponsored by Representatives Linda Serrato, passed the House of Representatives (49-20) and the Senate (27-0). The legislation helps address the lack of available risk capital in New Mexico as outlined by the NMIDEA Policy Brief: Access to Risk Capital in NM. The bill creates the Venture Capital Investment Act and the venture capital investment fund under the New Mexico Finance Authority. The purpose of the fund is to make investments in new, emerging or expanding businesses in New Mexico that create new job opportunities. These investments are required to be made with venture private equity funds or with New Mexico businesses in early stages of development, where the investments enhance the economic development objectives of the state.
House Bill 163 (Tax Changes), sponsored by Representative Christine Chandler, served as this legislative session's tax package and accounted for more than $400 million in tax breaks. The legislation includes a repeal of the social security tax for most New Mexicans, a phased in repeal of state income tax for military retirees, creates a state-based child tax credit. The package also reduces the state gross receipts tax (GRT) and compensating tax from 5.125 percent to 4.875 percent over a two year period, however, it also provides for restoration of the 5.125 percent GRT if, in the next five years, the general fund transfer of revenues in any year is less than 95 percent of the amount transferred in the previous fiscal year. The bill also provides gross receipts tax and governmental gross receipts tax deductions for the sale of services to a manufacturer.
House Bill 2 (General Appropriations Act), sponsored by Representative Patricia Lundstrom, made several key economic development appropriations. The Economic Development Department's FY23 operating budget includes about $2.6 million more in general fund revenue, or a 18.9 percent increase over FY22. The budget addresses agency priorities, such as JTIP funding, filling vacancies in the film department, creating a justice, equity, diversity, and inclusion office and expanding the number of regional representatives available to local communities from 6 positions to 11 positions. In addition, the budget includes $50 million in nonrecurring funding for LEDA, $70 million for business space development (per the Enterprise Opporunity Act), $40 million for a new film academy, $12 million for JTIP, $10 million for MainStreet capital outlay projects, $300,000 for business incubators and $169,000 for international trade.
Legislation that Stalled in the Committee Process
House Bill 80 (Angel Investment Credit Refundable), sponsored by Representative Linda Serrato, proposed to increase the amount of angel investment credit from 25 percent to 40 percent of the investment and makes this tax credit refundable. For a qualified investment in a majority women- or person-of-color-owned business, the credit is 50 percent of the qualified investment instead of the proposed 40 percent for other businesses.
HB 80 received a Do Pass (8-2) from the House Commerce & Economic Development Committee, but stalled in the House Taxation and Revenue Committee.
House Bill 129 (Business Income by Single Sales Factor), sponsored by Representatives Candie Sweetser and Moe Maestas, repeals the use of the three-factor formula apportionment of multi-state income in favor of a single sales factor formula apportionment for most corporations and pass-through entities. The legislation sought to create a system that would encourage, rather than discourage, economic base employers from hiring New Mexicans and investing in capital infrastructure in New Mexico.
HB 129 unanimously passed the House Commerce & Economic Development Committee on a no-reccomendation motion, but stalled in the House Taxation and Revenue Committee.
NMIDEA is the statewide economic development association with membership from economic development professionals and private sector businesses across New Mexico. NMIDEA's mission is to promote New Mexico's economic growth through focused advocacy of economic development issues, providing networking, professional development education and training opportunities for its members.
For more information, please visit newmexicoidea.org