Legislature sends food stamp bill to governor

September 24, 2011 • State News

SANTA FE, N.M. (AP) — The Legislature edged closer to wrapping up a special session as it gave final approval Friday to measures sought by Gov. Susana Martinez, including food stamp assistance for New Mexicans who faced a possible cut in benefits.

The House and Senate on Friday endorsed a measure providing $450,000 to supplement federal food stamps for the elderly and disabled so they get at least $25 a month in assistance. The state program serves nearly 5,000 people but will run out of money at the end of the month without the legislation.

The proposal also provides as much as $12 million for Medicaid by tapping into money that otherwise will go back to the federal government if it isn’t allocated by the state.

Also winning final approval was a proposal to tighten a preference given to New Mexico businesses that bid on state government contracts. Supporters say it will help stop abuses in the current system in which out-of-state businesses can qualify as a New Mexico firm [auth] when bidding on government contracts.

Both measures go to the governor to be signed into law. The bills cleared their last hurdle in the Legislature when they passed the House unanimously.

Also Friday, the Senate approved a proposal to shore up the state’s unemployment fund without an immediate tax increase for businesses. However, the measure could face trouble if it reaches the governor’s desk.

The measure will prevent a potentially hefty tax increase on employers in 2012 if Martinez loses a pending court challenge over a veto of unemployment legislation.

Senators voted 37-3 for a proposal to keep current tax rates in place next year for businesses, but higher premiums would be paid in 2013 to keep the unemployment compensation program from running out of money. Three Republicans opposed the measure. The bill goes to the House for consideration.

Before approving the measure, the Senate rejected a Martinez-backed measure that would maintain current tax rates through 2013, but allow borrowing $70 million from the state’s main budget account if necessary to pay unemployment benefits.

The loan would have to be repaid over five years, but with no interest charges. The proposal also would have directed a state panel to develop recommendations for changing the unemployment rate system. The governor objects that the Legislature can override current provisions in law for automatically setting rates based on the fund’s balances and the yearly statewide payroll.

Democrats objected to the proposed loan. Taxes on businesses have traditionally covered the cost of unemployment benefits.

“Boy, if we’re going to start doing what’s happening in Washington where we’re just borrowing, borrowing, borrowing, I think that’s a very scary precedent,” said Sen. Peter Wirth, D-Santa Fe.

Sen. Steven Neville, R-Aztec, defended the proposal, saying a tax increase would hurt businesses and the economy. He said the proposed transfer might not happen and would take place only if the fund wasn’t otherwise able to cover jobless benefit.

“All of us want to try to keep the businesses strong,” said Neville.

Scott Darnell, a spokesman for the governor, said although the Senate-passed bill “locks the rate for the next year, it fails to address the problem with the management of the fund head on.”

Under a current rate schedule, tax payments by a business average $325 a year for each of its employees. The required contributions vary for each business depending on its history of unemployment claims.

The Senate-passed bill will keep the current rate schedule in place through next year, but there would be an increase in 2013 of at least $17 million and it could be higher if the unemployment fund’s balances drop too low.

Sen. John Arthur Smith, D-Deming, said lawmakers needed to pass the measure because taxes on businesses will go much higher if the governor loses the legal challenge pending before the state Supreme Court.

Earlier this year, Martinez vetoed a $128 million unemployment tax increase that the Legislature had approved but signed other provisions that reduced jobless benefits. Several Democratic lawmakers filed a lawsuit to invalidate the veto. The court could order the $128 million increase implemented if it overturns the veto.

The state Constitution allows line-item or partial vetoes in bills that appropriate money for specific programs or services. However, lawmakers contend the unemployment legislation didn’t allocate any money — making the tax veto improper.

Since the Legislature approved the $128 million tax increase, the state’s jobless rate has started to drop and the financial outlook for the unemployment fund has improved. Previously, the fund was projected to run out of money in early 2012 but now is expected to remain solvent until 2013.

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