Has the Promise of the OMB Uniform Guidance Become Reality?

A few years ago, the federal government adopted grants reforms designed in part to improve the way governments at all levels treat nonprofits that perform services on their behalf. Notably, the reforms, known as the OMB Uniform Guidance, provide that nonprofits are entitled to be reimbursed by state and local governments for some or all of their indirect costs when federal money is in the funding stream.

The National Council of Nonprofits wants to know if the promise of the OMB Uniform Guidance has become a reality.

If your nonprofit has government grants or contracts, please complete the Nonprofit Uniform Guidance Implementation Survey. Your individual responses will be kept confidential, but our state’s aggregated results will help inform advocacy efforts with regard to the OMB Uniform Guidance and more generally, government-nonprofit grant/contracting reform.

Please complete the survey by September 8, 2017.

Beth Bowsky, Policy Specialist - Government-Nonprofit Contracting, National Council of Nonprofits

State Tax Reform

Lawmakers are agreed that New Mexico needs comprehensive tax reform...and that's where the agreement ends.  It is unlikely that they will do a complete tax overhaul during the Special Session.  However, if they're going to balance the budget, the state will need to find additional revenue...which means additional taxes.

On May 17, the Albuquerque Journal reported three options are being considered:

  • Pass HB 412 now, keep the tax rates high for one year and then consider lowering the rate
  • Work on tax reform during the interim and address the proposal in January 2018
  • Hold a 90-day study of the tax system and enact changes fall 2017

On May 19, the Albuquerque Journal reported that another suggestion to generate revenue is being considered:

  • Gross receipts tax on retail sales made online
  • "Some new tax liability on nonprofit hospitals.  The idea would be to treat nonprofit hospitals more like their for-profit counterparts."

The Governor favors HB 412, which will impact low income New Mexicans the hardest, increasing their need for nonprofit services at the same time that it makes it harder for nonprofits to provide those services.  See one page info sheet by NM Voices for Children.

A new version of HB 412 will be proposed during the Special Session; it is over 400 pages and won't be seen until Wednesday.  House Speaker Brian Egolf said "that it simply isn't reasonable to pass a tax overhaul this week."  The Governor has commented several times on "closing tax loopholes," which translates to nonprofits losing their state tax exempt status.

New Mexico Thrives will continue to monitor developments.

The State Budget as a Moral Contract: Supporting Our Values with Our Dollars

When considering the budget, we need see it as more than just a mandate on where state monies will come from and how they’ll be spent.  The budget is a moral document, a way in which our government clearly expresses its values and priorities through what it funds or doesn’t fund.

Over the last few years, New Mexico has struggled with budget holes which have been plugged by slicing away at benefits and program funding from areas such as education, healthcare, and infrastructure. This year is no exception.  Our state is once again mired deep in a budget crisis of overwhelming proportions. Legislators from both sides of the aisle are proposing various strategies to deal with the budget crisis, unfortunately with no clear resolution in sight at this point.

Here are a few of the most prominent budget bills currently making their way through the Round House:

HB202 requires internet merchants to pay Gross Receipts Tax on goods sold online to New Mexico residents.  Currently, out-of-state online merchants have an unfair advantage over local brick-and-mortar businesses because while they are profiting by doing business in New Mexico, they are not contributing to our tax base.  The fundamental issue here is tax fairness -- our economy can’t afford to continue missing out on important sources of tax revenue, especially now.  What values are being expressed in this proposal?  Is it the value of fairness?  Is it the value of growing local business to grow the economy?

HB316 reduces funding to the New Mexico Medical Insurance Pool.  It’s sponsored by Representative Paul C. Bandy and supported by Governor Susana Martinez.  The House Business and Industry Committee made some minor amendments and gave it a Do Pass Without Recommendation. It’s moved to the House Health and Human Services Committee.

The Medical Insurance Pool is a state program that provides health coverage for people who are considered high-risk and are often unable to get coverage under other policies.  According to the Office of the Superintendent of Insurance, the proposal would "save the state approximately $6 million in general funds, but will forgo $24M in matching funds."  Under this bill,some people will lose health insurance, and the rest of us are likely to see increased health insurance premiums.  By cutting critical funding for those who most need health care, legislators will lose a critical  federal funding match, and transfer the burden to New Mexicans.  For each dollar spent by the state on health care, we receive $4 in federal funding.  

Trip Jennings, in New Mexico In Depth, further examines the several implications of this bill.  Without getting lost in the details, let’s step back and take a broader view.  What is driving this proposal?  Why would legislators throw away federal funding?  What priorities rise to the surface?  Do our legislators value saving money more than they value people’s health, lives, or the costs to individuals?  Is this a reflection of our values?   If legislators don’t hear from nonprofits and their constituents, then this bill will move forward unimpeded.

Section 96 of HB412, creates a Sales Tax on food, except for those receiving benefits through the federal Supplemental Nutrition Assistance Program (SNAP).  Another attempt to tax food is SB416,a proposal that targets food with “minimal-to-no nutritional value.”  Let’s tease these apart and consider the implications...

Not all low income families receive SNAP.  If HB 412 is passed, anyone who cannot provide proof of SNAP benefits must pay tax on food.  This disproportionately affects those who can least afford it.  What’s the inherent message in this proposal? Is it that everyone needs to share the burden of the current financial crisis?  Or perhaps it’s that balancing the budget is more important than people being able to feed themselves?  Representative Carl Trujillo, the acting chairman of the House Taxation and Revenue Committee, said "It's off the table because of the food tax,"meaning that it’s not a viable option due to the unfair nature of its content.

The tax on food with “minimal-to-no nutritional value” doesn’t sound so bad, at first.  But as you read through the legislation, you see that this includes cake, pudding, ice cream, juice, and ice tea.  If you’re wondering what’s so bad about that, let’s remember those low income families.  What if your child isn’t feeling well and you want to give him or her some juice?  Now it’s going to cost more.  What if it’s your child’s birthday and you want to make or buy a birthday cake?  Not only do you need to somehow stretch your money to pay for the cake, but the tax as well.  What if you live in a food desert and the nearest place to buy food is a convenience store?  Sometimes people buy junk food because it’s all they have access to or it’s all they can afford.  This tax is an attempt to treat a symptom, instead of addressing the cause.  The message behind this proposal is that people shouldn’t eat food with “minimal-to-no nutritional value.” The sponsors are placing a value judgement on the behavior of others, and limiting freedom of choice.  Without a plan to ensure that people have access to nutritious, affordable alternatives, it’s unfair and unreasonable.

HB412 is sponsored by Rep. Jason Harper, Sen. John Arthur Smith, and Sen. Carlos Cisneros.  It’s scheduled in House Taxation and Revenue Committee on March 3, 2017.  A tax on food would affect all of us, but most especially those who are struggling to provide for themselves and their families.  You can reach out to your Representative and Senator to let them know how this tax will affect your community.

SB416 is sponsored by Sen. George Munoz.  It has been sent to the Senate Corporations and Transportation Committee.  Consider contacting your Senator and asking for a comprehensive plan for addressing food security.

Paying attention to the state budget is important.  Nonprofits need to understand the broader ramifications of legislation that is being put forth, including the very real impact that these laws have on our communities, either positively or negatively. We must ensure that these communities have a voice at the table, and remind our elected officials that our state budget is a moral contract between them and all New Mexicans. Above all, we must hold them accountable for the legislation they propose and the votes they take during the Legislative Session.

See also:

Budget Dominates 2017 Legislative Session

We’re halfway through the 2017 Legislative Session and the budget is still unresolved.  Typically the Feed Bill (funds for the legislative session and interim committees) takes only a few days to pass, but as of February 6th, no mutual agreements have been reached. What New Mexico desperately needs now, more than ever, is visionary leaders who propose creative solutions and take bold, definitive actions, to not only dig us out of this hole, but move our economy forward.

The solvency package to address the $69 million deficit in the fiscal year 2017 state budget still has not been finalized.  The Governor signed the solvency package, but vetoed certain line items (above-the-line items are mandatory inclusions, such as education, and below-the-line items are seen as additional or expendable expenditures) so the bill had to go back to the House and Senate.  The House passed an amended version of the bill that is now back in the Senate. The solvency package includes cuts to public education, which are troubling, but fortunately not as severe as initially proposed.

Even as lawmakers grapple with this year’s budget, next year’s budget holds even greater challenges.  The estimated deficit for the fiscal year July 1, 2017 to June 30, 2018 is at least $300 million, and could be as high as $600 million.  Lawmakers are looking for ways to reduce expenses and eliminate unnecessary spending.  While there is some agreement on what these cuts should be, many areas being targeted are contentious, which leads to the battle over the budget.

Left out of the budget for next year is $1.2 million in state funding to add to a federal food stamp program for seniors and disabled people on fixed income.  The state program currently supplements the minimum federal assistance of $16/month to bring it up to $25-$30/month.  The proposal will cut the state funding, leaving seniors and disabled people who receive the minimum, with just $16 worth of food stamps each month.  For more details, see the information prepared by the New Mexico Center on Law and Poverty.

3 Proposed Bills that Affect Nonprofits

We’ve just entered the third week of the 2017 Legislative Session and legislators are still wrestling with finalizing a solvency package that will plug the $69 million hole in this year’s budget; this has been the first order of business, before they can even begin to address the new fiscal year’s budget.  Nonprofits need to be vigilant, as legislators are looking for ways to cut expenses which may impact the communities you serve.  Legislators need good ideas for how to generate new revenue for the state and nonprofits can be helpful partners in this. For more about the solvency package, see the article by Andrew Oxford, “Lawmakers send governor last compromise bills to balance state budget,” the New Mexican, January 25, 2017.

New Mexico Thrives provides this legislative analysis and review as part of our service and we will keep you updated with developments as they happen.  

Below are three bills that will directly affect nonprofits, if they are passed. They have been introduced and are currently moving through committees.

 HB224

  • limiting the personal liability of volunteers performing services for a nonprofit organization.

Sponsors:  Rep. Yvette Herrell and Rep. Bob Wooley

What you need to know:

  • This bill protects volunteers who act in good faith
  • If your volunteers need to be licensed, certified or authorized by the state and they are not, this bill will not protect them

Implications for your nonprofit:

  • This bill will provide added protection for your volunteers UNLESS your volunteers need to be licensed, certified or authorized by the state and they are not.  If your volunteers have the required license, certification or authorization, then it provides added protection for them.

Unanswered questions:

  • If volunteers need to be licensed, certified or authorized by the state and they’re not, who is liable if something happens?  Is it the nonprofit or the volunteer?

 

SB168

  • an act relating to lobbyist regulation; changing reporting requirements; changing registration fees.

Sponsor: Sen. Jeff Steinborn

What you need to know:

  • If passed, lobbyist registration fees will change from $50 to $100  

Implications for your nonprofit:

  • Increase cost to register your lobbyist
  • You will need to factor in the extra expense in your lobbying budget
  • Slight changes in reporting requirements, see SB0168 for details

 

SB225

  • an act relating to lobbyist regulation; requiring estimated lobbying expense reports to be filed by lobbyists’ employers; requiring reports to be posted online.

Sponsor:  Sen. Jeff Steinborn

What you need to know:

  • If your nonprofit hires a lobbyist, this bill will require you to file estimated lobbying expenses with the Secretary of State

Implications for your nonprofit:

  • If you hire a lobbyist, you should already be tracking lobbying expenses, which get reported on the 990.  This bill will ask you to estimate upcoming lobbying expenses.
  • You will need to factor in the extra time and expense in your lobbying budget
  • Two reporting deadlines:
  •    January 15 for estimated expenses January 1 – April 24 of current year AND actual expenses from April 25 – December 31 of the previous year.
  •    May 1 for estimated expenses April 25 – December 31 of the current year AND actual expenses from January 1 – April 25 of current year
  • Effective date if passed: December 15, 2017
  • If your nonprofit lobbies, then you should take a look at what is being proposed: SB0225 for all the details
  • Be sure you understand the difference between advocacy and lobbying.  Generally, advocacy is considered educational, helping people understand the importance of an issue or the implications of a policy.  Lobbying is defined as trying to influence the outcome on a specific piece of legislation.  See the IRS website for more information.

HB = House Bill
SB = Senate Bill

Nonprofits and the 2017 NM Legislative Session

With a state deficit of approximately $69 million, nonprofits need to pay attention to what’s going on during this legislative session which began January 17, 2017. 

Legislators have already been talking about funding cuts and tax increases.

As a nonprofit, you need to speak out to protect the communities you serve.  Know your rights: advocacy is allowed.  You’re probably already doing some, think of advocacy as education.  You can and should be educating the community, your donors, and your legislators about the importance of your work.

IRS rules apply to lobbying, not advocating.  Lobbying is when you try to influence decision makers.  Nonprofits are allowed to lobby, but you need to track and report lobbying expenditures.  See the IRS website for more information.

With respect to the 2017 session, pay attention to what is being proposed and let your representative know what affect it will have.

Follow the activities of the Appropriations & Finance Committee and the House Taxation & Revenue Committee to see what is being discussed.

You can sign up for legislation tracking service with My Roundhouse.

Do you know who your representative is, or your senator?  Go to the NM Legislature website and check Find My Legislator.

For opportunities to visit the Roundhouse, check the 2017 Legislative Social Calendar.  Come prepared with one page information sheets about your organization.

Why?

Are you wondering, why a state association?

From my position with the Center for Nonprofit Excellence, United Way of Central New Mexico, I could see the great work being done by some nonprofits.  I was also seeing the statistics about New Mexico as the poorest state in the US, and the worst place to raise a child.  How could it be that so much could work was being done and yet, the issues were persisting?  Why weren’t we making progress and more importantly, how can we work differently together?

Multiple conversations and research led to the following conclusions:

  • We have been trying to change outcomes without changing attitudes (whether you believe you can, or believe you can't, you're right)
  • Too often, nonprofits work in silos focused on delivering services and surviving, unaware of other efforts or available resources
  • Nonprofits can do better at aligning efforts and working across sectors, but they will need support

With just over two million people in New Mexico, it’s possible to work together.  The state nonprofit association is intended as a vehicle for driving big, positive change.

What about the Center for Nonprofit Excellence, Santa Fe Community Foundation, SHARE New Mexico, NonProfit Back Office Resources, MediaDesk, SINC, and the Nonprofit Resource Group?  In the absence of a state association, several organizations have arisen to address some of the needs of nonprofits.  Even if you combined all that these organizations do, they don’t provide all the services and benefits that state associations typically do.  In the spirit of collaboration, we will work together, building on each other’s strengths and addressing the gaps.

by Tsiporah Nephesh