Preparing for the 2019 Legislative Session

New Mexico will have a new Governor with a new agenda. To get some idea of her priorities, see Governor-Elect Michelle Lujan Grisham’s policy agenda.

The 2019 legislative session will be extremely busy. Legislators are planning two strategies to cope with the volume of expected legislation:

  • The Rocket Docket: any legislation from the past two years that passed unanimously or with very little opposition, but was vetoed by the Governor, will be placed on the rocket docket to be moved through the House and Senate in the first few weeks of the 2019 session.

  • An Omnibus Bill: is where a number of diverse or unrelated subjects are combined into one bill. Omnibus bills can be dangerous because unpopular legislation can be slipped in and overlooked. The size and complexity of omnibus bills make them difficult to analyze.

Tax reform will be on the agenda for the 2019 legislative session. Representative Jim Trujillo, Representative Jason Harper, Senator William Sharer and Senator Carlos Cisneros will all be sponsoring tax bills.

Senator Cisneros has already pre-filed Senate Bill 11: an act relating to taxation; excluding certain entities from a gross receipts tax exemption for nonprofit organizations.  The bill would exempt receipts of organizations that have 501(c)(3) status or 501(c)(6) status from gross receipts tax.  It appears that the purpose of the bill is to find a way to ensure that Los Alamos National Laboratories pays gross receipts tax.  Unfortunately, the bill has overlooked that there are twenty-nine different 501(c) designations, all contributing to the quality of life in New Mexico.  Note: this bill does not say anything about nonprofits’ exemption from paying gross receipts tax on goods.

The Federal Appropriations Bill and What It Means for Nonprofits

The 2018 federal omnibus spending bill passed Congress and was signed into law on March 23, 2018.

Good news, almost: the Johnson Amendment was untouched in this bill.  The National Council of Nonprofits anticipates that further attempts to weaken or repeal the Johnson Amendment will be made, possibly as early as this summer ("Omnibus Spending Bill's Silence on 1954 Johnson Amendment an Apparent Victory for Nonprofits, Houses of Worship, and Foundations," National Council of Nonprofits March 21, 2018.)

If your organization hasn't yet signed the Community Letter in Support of Nonpartisanship, please take a moment to do so.  Let Congress know your organization stands with nearly 5,800 charitable, religious, and philanthropic organizations in expressing strong support for maintaining the Johnson Amendment.

Funding Increases and Decreases

Funding for Food and Nutrition

  • $6.175 billion in funding for the Women, Infants, and Children (WIC) program, which is $175 million below the fiscal year 2017 level
  • An additional $1.5 billion for the child nutrition programs, including $564 million for the Summer Food Service Program
  • $74 billion in required mandatory spending for the Supplemental Nutrition Assistance Program (SNAP), $4.5 billion below last year’s level

Funding for Social Services and Assistance

  • $28 billion in discretionary funding for Administration for Children and Families (ACF), which is $4 billion more than last year
  • Early childhood programs are slated to receive an increase of nearly $3 billion
  • Head Start would see a boost of $610 million
  • Child Care and Development Block Grant is slated to receive a $2.4 billion increase to $5.2 billion
  • $2.37 billion increase for child care development block grants, an 80 percent year-over-year increase
  • 12.5 percent in annul credit allocations for four years in the Low-Income Housing Tax Credit Program, and expands the income-averaging rules

Funding for Arts, Culture and Community Engagement

  • The National Endowments for the Arts and the National Endowment for the Humanities get funded at $153 million each, $3 million more than last year
  • The Corporation for National and Community Service (CNCS) will receive about a 5 percent increase over last year
  • The Corporation for Public Broadcasting (CPB) will be funded at the same level as last year

Funding for Census 2020
The government conducts a census every ten years and then uses this information to determine funding to the states.  New Mexico is typically under counted, so we receive less funding than we need.  New Mexico Thrives will provide more information about preparing for the 2020 Census and how nonprofits can help while still protecting our communities.

  •   $1.34 billion funding increase for the Census Bureau to help prepare for the 2020 count

Funding for Education

  • The bill will increase the maximum Pell Grant award to $6,095, and would provide $350 million for the Public Service Loan Forgiveness Program that benefits employees of nonprofits and governments


Action Steps

1. Sign the Community Letter in Support of Nonpartisanship.

2. Share your organization's storyLift Your Voice to Protect Charitable Giving Incentives. The National Council of Nonprofits is collecting nonprofit stories to protect charitable giving.

3. Join New Mexico Thrives, New Mexico's state nonprofit association.  We are stronger together.


National Council of Nonprofits Special Addition of Nonprofit Advocacy Matters

Stand for Your Mission, board advocacy guide and resources

Bolder Advocacy nonprofit advocacy resources and guidance

2018 New Mexico Legislative Summary

The 2018 legislative session is over. The extra revenue from oil and gas removed the urgency for tax reform during the thirty day session.

One tax reform bill was Senate Bill 17, Gross Receipts for Certain Nonprofits, which passed, but was vetoed by Governor Martinez.

The bill was intended to ensure that the national labs pay tax regardless of the structure (for profit or nonprofit) of the their management corporations. The Defense Department complained that the national labs were singled out for taxation by the state of New Mexico.

The Los Alamos National Laboratories' management contract is currently out for bid.  Three universities have submitted proposals.  If a nonprofit wins the management contract, the state will lose approximately $25 million in revenue.

If one of the universities wins the management contract for Los Alamos National Labs, we can expect legislators to propose another bill in 2019 in an attempt to stop further loss of taxes.

One amendment that was proposed in 2018 as a work around to singling out the national labs was to tax nonprofits with revenues over $150 million, with the exception of nonprofit hospitals.  The way the amendment was written, the bill would only tax national labs, if they were managed by a nonprofit entity.

Creating a threshold for taxing nonprofits sets a dangerous precedent.  Once the public has accepted taxing nonprofits, legislators can lower the threshold, putting all nonprofits in jeopardy.

The Revenue Stabilization and Tax Policy Interim Committee will begin meeting in June.  It seems likely that comprehensive tax reform will be on the agenda.  New Mexico Thrives is working on creating a data report about nonprofits to share with state legislators so they can make informed decisions.

State & Federal Tax Updates

State Tax Reform Efforts

State legislators will be focused on the budget and tax reform in 2018.  House and Senate leadership indicated that we can expect to see another bill to tax nonprofit hospitals, similar to the one passed during the special session, but vetoed by the Governor.  This bill was negotiated with and is supported by nonprofit hospitals.

Two tax bills have been pre-filed:

  • Senate Bill 17, Gross Receipts for Certain Nonprofits, is intended to ensure that regardless of the type of corporation that has the management of New Mexico’s national labs, the labs will be required to pay taxes.  The bill preserves exemptions for 501(c)(3) and 501(c)(6) organizations.  There are 29 different 501(c) designations.  Does the bill leave the others 501(c) organizations vulnerable to being required to pay taxes?  New Mexico Thrives will pursue this question.
  • Senate Bill 49, Tax Reform, has two references to nonprofits: Section 37, p. 120 stating that donations to 501(c)(3)s are tax exempt; and Section 55, p. 151 stating that donations to 501(c)(3)s are exempt from Gross Receipts Tax.  New Mexico Thrives will follow the progress of this bill.

Federal Tax Update

The federal tax bill passed and nonprofits need to prepare for the ripple effects.  These will be seen in decreased donations, increased need, the state's efforts to tax nonprofits ("close tax loopholes"), federal efforts to reform entitlement programs, changes to payroll taxes and increased health coverage costs.

The National Council of Nonprofits says that the "New tax plan will 'substantially' hurt the work of charitable nonprofits in local communities."  They're calling this a time for collective action

Tax bill effects on nonprofits:

  • The basic exemption has doubled which means that fewer people will itemize their deductions.  It is estimated that annual charitable donations will decrease by $13-22 billion nationally.
  • The estate tax has doubled, which is estimated to mean a further loss of approximately $4 billion per year.
  • Unrelated Business Income Tax (UBIT) will be calculated separately for each business activity, nonprofits will no longer be able to use losses from one to offset the profits of another.
  • Federal revenues will shrink by at least $1.5 trillion, which means less money available to address our nation's needs.  If you receive federal funds or state pass-through funds, this will affect your funding for at least 10 years.

For more information, see National Council of Nonprofits, Federal Tax Reform

New Mexico Nonprofits, We Need to Make a Choice

New Mexico nonprofits have a choice to make:

  • Do nothing and hope for the best
  • Be reactive
  • Be proactive
  • Be boldly proactive

We need to make our choice before the choice is made for us.

Do Nothing and Hope for the Best:

  • The New Mexico State Legislature has made attempts in the past to tax nonprofits and those attempts have all failed.  Even the 2017 attempts both died in committee.  The state legislators are still talking about tax reform and they are looking very seriously at nonprofit state level tax exemptions.  Even if the state legislators do not undertake tax reform in 2018, they will be positioning themselves to do so in 2019.
  • Congress has not been successful in passing Repeal and Replace, but they have already passed new rules so they can approve tax reform with a simple majority.
  • Trust others to speak up on your behalf.  Yes, some funders have contacted state legislators in the past.  A group of funders is currently in conversation about how to defend against efforts to remove state tax exemptions.  HOWEVER, these funders are not engaging with nonprofits to give us an opportunity to provide crucial data to inform the messaging.

Be Reactive:

  • Defend our tax-exempt status at both the federal and state levels.
  • Consider:

o   The federal government in their tax reform efforts is looking at nonprofits as a source of revenue.  See “Nonprofit Organizations Brace for a Tax Increase” by Allison Grayson, Independent Sector, October 20, 2017.

o   The State Legislature is actively working on tax reform.  Earlier this year, we saw two proposals, House Bill #412 in the regular session and House Bill #8 in the special session.  While these two bills died in committee, tax reform is still on the agenda.  Legislators have commissioned a study, and the report is anticipated for the end of December.

o   Even if legislators don’t attempt tax reform during the 2018 short legislative session, they will be preparing for tax reform in 2019.

o   When I met recently with a progressive state legislator and the subject of tax came up, he told me that the legislature has been unable to raise personal income tax, so they have to tax nonprofits, there’s no one else. 

o   A state lobbyist said that this was the most serious attempt to tax nonprofits that she has seen in the 20 years she has been lobbying.

Be Proactive:

  • Work with state legislators to help them understand the effects of their proposals.

o   Understand what is being proposed

o   Do the math with your organization’s budget

o   Translate the loss of the proposed taxes into how that would affect the work of your organization and its ability to deliver services

o   Share this information with your House Representative and Senator

  • Work with state legislators to define the terms used in a tax reform bill.  House Bills #412 and #8 included language to have nonprofits pay Gross Receipts Tax on “receipts,” but “receipts” was not defined.  Richard Anklam, New Mexico Tax Research Institute, warned that without a clear definition, “receipts” could be interpreted to include grants, contracts, donations, proceeds from fundraising events, and fees for service.

o   Protecting Nonprofit Nonpartisanship (Johnson Amendment)

o   Tax Reform

o   Charitable Giving Incentives

Be Boldly Proactive

  • Accept that the policies governing nonprofits are going to change and participate in the process.
  • Commit to coming together with other nonprofits to utilize your expertise, wisdom, and insight to propose changes to policies that will benefit our communities and are workable for nonprofits.
  • Join New Mexico Thrives to ensure that New Mexico nonprofits have a strong voice in Santa Fe and are not overlooked in Washington.

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.


  • 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?



  • 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



  • 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