A Look at the Record: Will Supreme Court ruling against Martinez veto increase business costs?

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 increase about which McClure was concerned is detailed in the Greater Albuquerque Chamber of Commerce’s 2011 legislative agenda document, “Priority Issues for Economic Stimulus“:
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.
The 2010 veto by Richardson to which Darnell referred was never challenged and ruled upon by the Supreme Court.


Interim Watch: Unemployment Insurance Fund (In)Solvency

By Charlotte Chinana

The Legislative Finance Committee met in Socorro Thursday to hear not only the latest projections for state revenues, but also the status of the unemployment insurance fund in the wake of Governor Martinez’s partial veto earlier this year of legislation that would have fixed the problem. A panel presentation on the subject pretty much says it all:  “Unemployment Insurance – Where are we headed in 2012? Insolvency, Federal Loans and Employer Contribution Increases.”

Celina Bussey, Cabinet Secretary for the Workforce Solutions Department (WSD), gave a detailed presentation about the unemployment outlook for New Mexico.

According to her office, as of May, the state’s average unemployment rate was 6.9%, and it has been steadily declining over a three-month period.

However, while the overall certified unemployment insurance claims have decreased during that period (from approximately 66,000 to 36,000), the state isn’t seeing a similar overall decline in initial claims being filed on a weekly basis. Moreover, there is a gap between people who are unemployed, and people who are unemployed and collecting unemployment benefits.

Secretary Bussey stated that, since the state trends tend to mirror federal trends – with a lag – there’s a concern that we might see an uptick in the unemployment rate in New Mexico.

Officials from WSD highlighted the fact that unemployment compensation payments have more than doubled by fiscal quarter since 2009, and that during peak periods (over the past two years) daily payments have hit the $1 million dollar mark. While the state had projected to pay out approximately $16 million in benefits for the 2011 fiscal year, the actual figure was closer to $17.2 million.

To address this shortfall, the state is looking into various scenarios, including increasing employer contributions, and taking out a loan from the U.S. Department of Labor). In addition, changes are to the reporting system are being contemplated to identify potential instances of overpayment, while ensuring that work search requirements are being met.

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Hard Times: Colbert to Pick Up Hoe; plus The Great Recession’s Impact on NM

Recently, the United Farm Workers (UFW) launched the “Take Our Jobs” campaign, an effort to highlight the importance of immigrant workers to our food supply — and the difficulties agricultural employers have in maintaining a stable, legal workforce.

Last night, UFW President Arturo Rodriguez was a guest on Comedy Central’s Colbert Report. Responding to the oft-repeated charge that undocumented immigrants who work in the fields are taking jobs away from American citizens, Rodriquez pointed out that few Americans are willing to take these jobs and their difficult working conditions.  That’s part of the inspiration behind the “Take Our Jobs” challenge.

Unfazed, Steven Colbert accepted the challenge. Sometime soon then, we can expect to see Stephen hoeing and weeding in some field in California or Arizona, camera team in tow.  He asked Rodriguez if there would be air conditioning.  You can watch it here:

The Colbert Report Mon – Thurs 11:30pm / 10:30c
Arturo Rodriguez
Colbert Report Full Episodes 2010 Election Fox News

The Great Recession in NM

In other news, a recent report from NM Voices for Children is worth the read.  Entitled “The Great Recession: How New Mexico Workers Are Faring,” it looks at wages and unemployment rates by job sector, compares the impact of the last four recessions on workers, the effect of the Unemployment Compensation program, and the longer-lasting personal consequences of a recession.

Here are some of the key findings of the report:

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Labor Day Logic: “Morally and Economically Indefensible”

Will rising yacht sales will lead to economic recovery.

Will rising yacht sales lead to economic recovery? Reich thinks not.

Democracy for New Mexico has a great post today (as usual) detailing the heavy toll the Great Recession is taking on working families.

NM Voices for Children issued a press release today urging the state’s congressional delegation to act quickly to extend unemployment insurance. An estimated 1,500 New Mexicans are expected to collect their last check by the end of the year.

According to Gerry Bradley of NM Voices for Children:

New Mexico’s working families are counting on Congress to make this cause their top priority so they are not left out in the cold without a paycheck or unemployment check to pay their mortgages and other bills. Without action to expand benefits, New Mexico will hit a severe setback on the road to recovery. These extensions not only help struggling families stay afloat – they are a direct stimulus to the local economy, which will help with job creation.”

For more facts, check out this report from the National Employment Law Project.

And former Labor Secretary Robert Reich minced few words on his blog today:

I keep hearing that the economic meltdown has taken a huge toll on the stock portfolios of the rich. That’s true. But the rich haven’t lost nearly as much of their assets, proportionately, as everyone else. According to a report from the Bank of America Merrill Lynch (“The Myth of the Overleveraged Consumer”), analyzing data from the Federal Reserve, the bottom 90 percent of Americans hold 50 percent of more of their assets in residential real estate, which has taken a far bigger beating than stocks and bonds…

Reich asks, where will the demand come from to revive the economy? He’s appalled by the answer given by Bank of America Merrill Lynch:

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