Solvency questions swirl around paid leave proposal as session nears homestretch

Yahoo

13-03-2025

Mar. 12—SANTA FE — As a hotly debated New Mexico paid leave proposal nears the finish line at the Roundhouse, questions are swirling about the plan's financial viability.
A House-approved bill creating a state-run paid leave program and authorizing $9,000 baby rebates for working parents — spread out over three months after birth — is awaiting a key vote in the Senate Finance Committee with just over one week left in the 60-day session.
Several committee members expressed misgivings Wednesday during a legislative analysis of the proposal, pointing out the bill does not specify where an estimated $193 million per year to pay for baby rebates would come from.
"I don't think I've ever seen where we didn't say how we were going to pay for something when we put it on the books," said Senate Majority Whip Michael Padilla, D-Albuquerque.
He also expressed concern the funding could end up being funneled out of an early childhood trust fund created in 2020 that will have an estimated $9.6 billion balance by the end of this year.
Rep. Christine Chandler, D-Los Alamos, one of the bill's sponsors, told reporters later Wednesday that lawmakers could appropriate money from the Early Childhood Education and Care Department's budget — not the trust fund — down the line.
"Is it funded? Not really. But does it need to be funded? That's the question," she said. "Well, just recall that (baby rebates) do not start until Jan. 1, 2028, so frankly, I would think it would be inappropriate to have the cost of the program in this year's budget when, in fact, it is at least one or two budget cycles out."
But even some advocates of creating a New Mexico paid family leave program have expressed solvency concerns.
Tracy McDaniel, policy director of the Southwest Women's Law Center, said members of a coalition of more than 50 groups are still trying to understand the implications of changes made to the bill before it was approved by the House on a 38-31 vote.
"We just want to make sure this is a fiscally sustainable program from year to year," McDaniel told the Journal.
She also said backers are trying to convince senators to expand the bill by extending the amount of paid time off workers could take off annually to care for family members or recover from medical procedures.
Paid leave bill's evolution
Supporters of a New Mexico paid leave program have tried for years to win approval at the Roundhouse.
This year's bill, House Bill 11, marks the furthest such legislation has advanced, but the proposal has also changed significantly since it was first introduced.
During Wednesday's hearing in the Senate Finance Committee, lawmakers also questioned the solvency of the wellness fund, a part of the bill that would require employees and employers to make contributions into a state-run medical leave fund.
Employees would pay 0.2% of their wages into the fund and employers with five or more workers would pay 0.15% of wages, allowing workers to take up to six weeks of paid leave for medical, bereavement, fostering, military exigency or sexual abuse safety purposes.
But New Mexico would be the lowest-income state to adopt the paid leave program, resulting in a lower amount of dollars making it to the fund but possibly a higher uptake rate, according to a legislative analysis of the bill.
The only situation in which the fund would remain solvent at the currently proposed premium rates is if only 4.5% of workers utilize the paid leave, per scenarios provided by the analysts.
The other hypotheticals with 6-8% of eligible New Mexicans using the leave would put the fund in a $227-870 million deficit, according to the report. The average of utilization in other states with similar programs is 6%, though analysts note that uptake rates are extremely difficult to predict.
Other states since policy adoption have increased employee- and employer-paid premiums to ensure solvency. Senate Finance Committee analyst John Kreienkamp said New Mexico legislators could also later inject a one-time cash infusion to build the fund balance.
But the funding uncertainty for both portions of the bill prompted criticism from Democrats and Republicans.
"I'm concerned because we certainly do not have room currently in the budget," said Sen. Nicole Tobiassen, R-Albuquerque. "I don't know where this magic pot of money is sitting."
But Chandler said she feels confident the bill is on solid financial ground. She pointed out the bill requires an actuarial study for its wellness fund before premiums are enforced.
For her part, Tobiassen also questioned whether remote out-of-state workers could get the baby rebates and whether estranged parents could split the $9,000 when only one parent is the main caregiver. Analysts could not fully answer those questions.
Vote on bill could come down to the wire
Despite hearing an analysis of the bill, the Senate Finance Committee did not vote on it Wednesday.
Such a vote will likely not happen until this weekend as analysts work to research senators' questions, a top committee staffer said.
Sen. George Muñoz, D-Gallup, the committee's chairman, said this week the paid leave bill is part of what he described as $3 billion in "unfunded mandates" approved by the House.
But House Speaker Javier Martínez, D-Albuquerque, called the legislation overdue.
"No one should have to choose between taking care of a sick child or a sick parent or showing up to work and putting food on the table," Martínez said this week.
Meanwhile, the bill's sponsors were not present at Wednesday's committee hearing, something some lawmakers objected to.
"We're almost wasting our time here today," said Sen. Jeff Steinborn, D-Las Cruces.
Chandler later said she found out about the bill presentation Monday evening through the committee's posted agenda.
She called it an unusual process but said it doesn't raise any red flags in terms of the bill's chance for winning final approval.
"If we're in a search for knowledge, I'm looking forward to when the (committee) chairman ... actually schedules our bill so that we can speak to him about where we're going with it and what we've learned through the process of, actually, several years of working on this bill," she said.