Oil and gas revenue to fund economic recovery bills in New Mexico

(The Center Square) – Two bills, Senate Bill 1 and Senate Bill 3, designed to aid New Mexico’s struggling businesses and individuals, have been signed by Gov. Michelle Lujan Grisham into law after broad bipartisan support.

For individuals, Senate Bill 1 provides $600 personal income tax rebates to front-line and low-wage workers claiming the Working Families Tax Credit.

Food and beverage businesses will receive a four-month tax holiday to help recover from the economic effects of COVID-19, according to the bill’s provisions as well.

New Mexico Chamber of Commerce President and CEO Rob Black said while it likely won’t cover everything, this is going to be very helpful to struggling businesses.

He points out that over the past year, New Mexico has lost 37% of its businesses, according to a study by a Harvard economics professor and the Gates Foundation, which tracks credit card swipes.

Senate Bill 3 provides for all small businesses in need of a loan, with up to $500 million available at a discounted borrowing rate.

“While folks are scared about taking out additional debt, the very low-interest rate on that, half of prime, it does create the opportunity to refinance existing debt, so really increase cash flow for folks,” Black told The Center Square.

The money for these loans is coming from the Severance Tax Permanent Fund, which is primarily funded through oil and gas revenue and has about $5 billion in it, according to Black.

The loss of tax income to be incurred through the tax holiday will be offset by the state’s reserve funds, of which it still has roughly 30%, Black said. This as well is funded primarily through oil and gas revenues, he noted.

While these moves will be helpful to New Mexican businesses’ recovery, Black points out some of the bills in the legislature right now, like mandated paid sick leave, would not be helpful.

“Our request is that the legislature really focus on recovery and supporting those businesses that are still barely able to operate if at all, and have seen huge reductions in revenue, and give them the space to open and start hiring people back to work,” Black said.

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