Business leaders say that addressing New Mexico’s economic woes in the 2003 Legislature will provide the impetus to remedying the state’s other top concerns

Business leaders say that addressing New Mexico’s economic woes in the 2003 Legislature will provide the impetus to remedying the state’s other top concerns

By Nancy Salem
Tribune Reporter

The buzzwords are the same: taxes, education, health care, water.

But business issues that languished in recent legislative sessions have gained momentum with each passing year, as New Mexico’s competitive disadvantages in the economic development arena become more apparent, business leaders say.

"There seems to be pretty good recognition that growing the economy is the catalyst needed to address other issues, such as schools, transportation and water," said John Carey, president of the Association of Commerce and Industry of New Mexico.

He said the state has a clear challenge.

"We’re a Rocky Mountain state, surrounded by and adjacent to some of the most pro-business and pro-growth states in the nation," he said. "We’re not competing with New York and Rhode Island. When people are looking at this part of the country, they compare us to states like Texas, Oklahoma, Arizona, Colorado and Nevada, which are very business friendly. It puts pressure on us to make the same case to industrial prospects."

Business development was a key part of the platforms of Democratic Gov. Bill Richardson and his opponent, Republican John Sanchez, during the gubernatorial campaign. Both candidates called for tax cuts and other measures to make New Mexico a more attractive place to do business.

Carey said the campaign promises will be tested on the floor of the 2003 Legislature, a 60-day session that kicks off Jan. 21.

Richardson last week proposed a seven-part economic development plan that includes a reduction in the top rate of the personal-income tax from 8.2 percent to 5 percent over five years, a $1,000 tax credit for businesses that pay 110 percent of the local prevailing wage, and expanded in-plant training.

"We’ve had good conversations with the governor and his team, and are encouraged that a number of items on the business agenda will be implemented," Carey said. "In an ironic way, the economic downturn has reinforced to many of our public policymakers that we have to grow our private-sector economy. The only way we can provide more money and resources for badly needed infrastructure is to have a larger source of income."

ACI each year assembles a detailed list of legislative recommendations that reflects the concerns of the state’s business community.

This year’s positions were developed after a series of issues round tables held statewide. Input was from ACI members, local chambers of commerce and other business groups. The positions are reviewed by ACI committees and approved by the board of directors of the business advocacy group.

This year’s recommendations pertain to agriculture, economic development, education, environment, government operations, health care, the Public Regulation Commission, taxation, telecommunications, tort and insurance reform, water and the workplace.

Carey said the key areas of concern are taxes, education, health care, water and economic development.

Here are some of the positions:

Economic development

ACI supports $20 million in recurring funding for the in-plant training program.

"There is broad bipartisan consensus that ample funding for this program is a proven economic development incentive that not only helps us recruit new business but also helps existing businesses add employees," Carey said.

The group will support a budget increase for the Economic Development Department that includes funding for outsourcing marketing and promotional activities.

Other recommendations are a tax credit that provides up to five years of tax relief for high-tech start-up firms, and an expansion of the gross-receipts tax deduction to provide an incentive for federal labs to provide technical help to businesses.

ACI opposes any cutback in economic development incentives, any requirements that would make it difficult to use industrial revenue bonds, and altering the basic structure of the lodger’s tax or changing the allocation of revenues.

Health care

ACI recommends a four-step approach to reduce the number of uninsured in New Mexico.

Allow greater flexibility in the scope and structure of Medicaid benefits to reduce costs, create broader eligibility and increase the number of covered individuals.

Implement the State Coverage Initiative to provide coverage for people who do not qualify for Medicaid and who would otherwise be uninsured.

Reduce the gross receipts tax on medical services.

Reduce the number of health insurance benefit mandates.

The group opposes any public or quasi-public single-payer system, and any legislation that would hold employers liable for medical decisions made by an employee’s health insurance plan.

Carey said a reduction in the gross receipts tax on medical services will help New Mexico keep existing doctors and recruit new ones.

"Most states do not have a similar tax," he said. "There’s a three-legged stool on health care that puts a burden on the industry here: gross receipts, lower Medicaid and Medicare reimbursements than other states, and the personal income tax."

Taxation

ACI advocates a comprehensive revision of the state tax system to fund essential public services "at reasonable levels" and stimulate private sector investment and job creation. The group wants a reduction in the personal income tax rate and "more favorable tax treatment of capital gains income."

"We think personal income tax relief and capital gains tax relief are two very important areas where we can become more competitive with our surrounding states," Carey said. "Our highest personal income tax rate is 8.2 percent. If we could get that down to 5 percent over several years it would be major progress."

The group opposes elimination or reduction of the gross-receipts tax on food.

Water

ACI supports completing water rights adjudications statewide by 2017, development of regional and statewide water plans and establishing a water court system to handle all matters involving water law.

It also advocates statewide water banking, protecting the state’s interest in endangered species litigation and a minimum funding level of $25 million in nonrecurring expenses for the Water Project Act.

Education

The business community has long advocated education reform because good public education is critical to business development.

The ACI education platform is detailed and extensive. Key recommendations are a Cabinet-level position of education secretary, and continued development of performance standards in schools with funding to develop "criterion-referenced" testing that measures student academic achievement against benchmark criteria for each grade level.

The group also supports merit pay for highly effective teachers.

Carey said bills related to ACI’s recommendations are being drafted. "I think on virtually all the recommendations there will be one or more bills introduced by legislators in both the House and Senate," Carey said. "I’m optimistic that a lot of issues important to the business community will get a fair hearing."

Rep. Ted Hobbs, an Albuquerque Republican, said last week that business issues will be on the front burner. He said Richardson’s proposed tax reductions will need bipartisan support.

"I’m optimistic it will get done," he said.

But he said the state also will have to address the economic impact of less tax revenue.

Hobbs said he will bring forward an in-plant training bill calling for $25 million in funding.

He said the gross-receipts tax on medical services is tricky because those tax funds help local government. He said he will propose a tax credit for doctors equal to the gross receipts tax so that local government revenues are not affected.

Hobbs said he will support a Cabinet-level education department and teacher salary increases.

"I think we’ll have a good, active session," he said.

There could well be a later special session to re-do the state tax code, he said.

http://www.abqtrib.com/archives/business03/011303_business_xgr.shtml