Sen. Pirtle, Rep. Montoya say businesses are asking for help
Republican state legislators want to introduce some bills during the upcoming special session aimed at helping businesses recover from coronavirus-related shutdowns and restrictions.
The main purpose of the special session of the New Mexico Legislature to start Thursday is to address an estimated $2.4 billion deficit for the current and upcoming fiscal year caused by the oil and gas industry downturn and the coronavirus pandemic. But Gov. Michelle Lujan Grisham is expected to announce by Wednesday in a “call” notice if other matters will be considered.
Two legislators, Sen. Cliff Pirtle, R-Roswell and Rep. Rod Montoya, R-Farmington, want three business-related bills to be heard.
Montoya’s bill would give employers relief on unemployment insurance rates. Pirtle’s bills would waive interest and penalties on gross receipts taxes during business shutdowns and would create a pandemic “takings” restoration fund to compensate small businesses for losses due to state orders.
“This is something I saw working with my local community,” said Pirtle. “We were working with them on letters (to the Governor’s Office protesting business shutdowns) and everything that we could do as a Legislature, and they wanted more. This was something we could do that I thought was plausible and would allow us to take a step forward standing up for our small businesses.”
The Small Business Pandemic Takings Reparations Act would establish a fund for up to 20 years that would provide personal tax credits and corporate tax credits to small business owners with 150 or fewer employees to compensate them for losses due to state-ordered business closures and restrictions. For fiscal year 2021, which starts July 1, the fund would be allocated for up to $55 million in state monies, according to a draft of the bill.
The tax credit fund would be handled by a new division within the New Mexico Taxation and Revenue Department, with Pirtle saying that some of the legislative allocations possibly could be provided to the department to handle that increased activity.
“The (state) Constitution guarantees just compensation when people are deprived of private property by a government entity,” Pirtle said. “Instead of every business taking the state to court and having costly lawyer fees for both the state and the businesses, we would create a way for them to prove up their losses and then have a more streamlined process so that we can get the reparations to them quicker so they can stay in business here in New Mexico.”
He said that, right now, the state has an administrative process available to businesses or property owners to compensate for losses or damages when they can prove the problems were due to state actions, such as work on a highway or water line.
He said the proposed fund would last for up to 20 years, so that payments could be spread over a period of time and the Legislature could plan for annual allocations.
In Pirtle’s other bill, the state would waive all interest and penalties for state and local gross receipts taxes or compensating tax liability due while the public health orders closing businesses are in effect. The taxes due would have to be paid in full by the 25th of the third month after the public health orders are lifted, and the businesses would not qualify if they were considered to be attempting to evade payment or reporting of taxes.
“If we destroy these businesses and they go out of business because of all these liabilities that they have and due to the orders by the governor, then we’ll miss out on that gross receipts taxes forever,” he said. “So we need to act now as a Legislature to support our local small business and ensure that we can keep them in business and afloat so that they continue to operate and bring in these tax revenues.”
The unemployment insurance bill now sponsored by Montoya would amend existing law to ensure that employer rates do not increase as a result of pandemic-related unemployment claims.
“This is something that business owners have been asking for,” Montoya said. “They also were asking for more loan programs, but those exist at the federal level. I am responding to what business owners say they need because, if they survive this year, they cannot afford to be hit with high unemployment insurance rates the next year.”
The amount employers contribute to the state’s unemployment insurance fund is determined by formulas that take into account the insurance contributions the employer has made in the past, the unemployment benefits its former employees have received and an average of its annual payrolls.
According to a draft of the bill, any unemployment claims filed from Jan. 1, 2020 to Dec. 31, 2021, would be excluded from determinations of the employers’ rate. Instead, the rate established in 2019 would be used to determine contributions.
The New Mexico Business Coalition asked Lujan Grisham to consider such an action six days after business shutdown orders took effect in March, said its president Carla Sonntag. The group is supporting the bill.
According to the New Mexico Department of Workforce Solutions, there were 103,972 state residents unemployed by the end of April 2020, compared to 41,959 in April 2019.
“We are not asking that they don’t pay unemployment insurance tax,” said Sonntag. “We are just asking that they not be held accountable for these massive layoffs that they had no control over.”
Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 351, or at email@example.com.