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.


Martinez loses another Supreme Court case

By Matthew Reichbach
On Wednesday, Governor Susana Martinez lost another case before the New Mexico Supreme Court. This one involved the state’s high court telling the Governor that vetoing a single digit from an appropriation, in this case slashing a $150,000 to $50,000, overstepped her authority as laid forth by the state Constitution.

The illegal veto would have slashed money appropriated to the New Mexico Mortgage Finance Authority. Two state Senators and two members of the state House of Representatives filed suit to invalidate the veto.

“Today’s ruling is a victory for our constitution and the people of New Mexico,” Senate Majority Leader Michael Sanchez, D-Belen, and Senate Finance Committee Chairman John Arthur Smith, D-Silver City, said in a joint statement following the Supreme Court’s decision. “The principle of separation of powers is the cornerstone of our government. The balance of power is equally divided among the three branches of government and the court’s decision reaffirmed this by preserving the legislature’s exclusive appropriating authority.”

The Supreme Court ruled unanimously against Martinez’s veto.

Reps. Luciano “Lucky” Varela of Santa Fe and Henry “Kiki” Saavdera of Albuquerque were also party to the lawsuit and the four legislators split the cost of bringing the lawsuit.

“The Court has now given guidance that the only way for the governor to prevent these types of excessive spending measures is to veto the entire amount,” Martinez spokesman Scott Darnell said according to Reuters. “The governor is hopeful that the Legislature will work with her to prevent such vetoes from becoming necessary in the future.”

This isn’t the first setback in the Supreme Court by the Republican governor.

Martinez has not had much luck with the state’s high court, losing three rulings including one on slashing regulations and another on her decisions involving the state labor board. The state ruled unanimously that Martinez exceeded her authority in removing two members of the Public Employee Labor Relations Board.

Martinez defended her vetoes by noting that governors had previously used similar line-item vetoes. These were 70 years ago and were not challenged at the time.

The Supreme Court did not make a decision on another lawsuit that Martinez is facing over one of her vetoes. The lawsuit contends that Martinez’s line-item veto of the portions of an unemployment insurance bill that raise revenue is illegal. The six lawmakers filing suit against Martinez argue that the bill does not appropriate money and therefore cannot be line-item vetoed.

The Greater Albuquerque Chamber of Commerce and the Association of Commerce and Industry both backed the bill that would stave off insolvency in the state’s unemployment fund. Already most states in the country have seen their unemployment funds go broke.