By Matthew Reichbach
The state Supreme Court ruled Wednesday that Gov. Susana Martinez’s line-item veto of a bill to shore up the unemployment fund was illegal. The court ruled that by stripping out a $128 million tax increase but leaving in nearly $80 million in cuts in the state unemployment fund, the part of the law that “was an unworkable piece of legislation,” according to Justice Edward Chavez.
The Supreme Court sided with six Democratic members of the state legislature including Speaker of the House Ben Lujan (D-Nambe) and Rep. Mimi Stewart (D-Albuquerque) in ordering the law “be reinstated as passed by the Legislature.” Stewart was the sponsor of the bill.
“Because the effect of the partial veto was to exempt most employers from making what would otherwise be mandatory contributions to the unemployment compensation fund for calendar year 2012, we hold that the partial veto was invalid,” Chavez wrote.
The Supreme Court had previously decided not to rule on the legislation and instead said the legislature and governor should work together to find a compromise on the bill. The legislators and Martinez could not come to an agreement and the special session ended without any unemployment bill passing.
Significantly, the court did not agree with one of the two legal arguments made by the plaintiffs, which was that the bill is not an appropriation bill, therefore it is not subject to the governor’s line-item veto power. Chavez wrote that “for the purposes of this Opinion, we assume, without deciding, that House Bill 59 is a bill appropriating funds.”
Rather, Chavez said the court looked to the question of whether or not the veto made the bill unworkable or changed the intent of the bill first. And it was on those grounds that the veto was invalidated.
What it all adds up to is that the bill will go into effect with the language passed by the state legislature.
Dispute over increased business costs
Martinez spokesman Scott Darnell told the Santa Fe New Mexican’s Steve Terrell, “Gov. Martinez used her line-item authority in the same way Governor Richardson did in 2010 and disagrees with the Court’s decision today. Unfortunately, Democrats will get their wish to raise taxes on small businesses to fund unemployment benefits, even though the unemployment rate in New Mexico has fallen from 8.7 percent in January to 6.6 percent today.
However, at the time the bill was on the Governor’s desk awaiting her signature, representatives of both the Greater Albuquerque Chamber of Commerce and the Association of Commerce of Industry (ACI) supported the measure and voiced opposition to a threatened veto.
The Albuquerque Journal reported ACI President Beverlee McClure as saying, ““By vetoing this legislation, she (the Governor) in effect forces a … (huge) increase on our employers. ”
The Chamber supports these efforts to prevent Unemployment Insurance Trust Fund insolvency because a move to Schedule 6 would put a significant financial burden on business. While an increase to Schedule 2, or 3 in an emergency, is not ideal, it is necessary to prevent a mandatory move to Schedule 6, which would be even more of a burden on business.