Fiscal impact
reports (FIRs) are prepared by the Legislative
Finance Committee (LFC) for standing finance committees of the NM Legislature. The
LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
Current FIRs (in HTML & Adobe PDF formats) are available on the
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Previously issued FIRs and attachments may
also be obtained from the LFC in
|
SPONSOR |
Rawson |
DATE TYPED |
|
HB |
|
||
|
SHORT
TITLE |
Workers’ Comp Assessments and Distributions |
SB |
74/aSFC/aSFl #1 |
||||
|
|
ANALYST |
Collard |
|||||
REVENUE
|
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
|
FY04 |
FY05 |
|||
|
|
$750.0 |
$750.0 |
Recurring |
Uninsured
Employers’
Fund |
(Parenthesis ( ) Indicate Revenue Decreases)
Relates to SB 111
Relates to appropriation in the General
Appropriation Act
LFC Files
Responses
Received From
Workers’
Compensation Administration
New
Mexico Department of Transportation
Department
of Corrections
SUMMARY
Synopsis
of SFl Amendment #1
The Senate Floor Amendment #1 to Senate Bill 74
strikes all SFC amendments, strikes Section 2 and inserts a new Section 2,
which imposes a fee on employers covered by Workers’ Compensation
Administration (WCA) of $2.30 cents per employee per quarter. Additionally, it requires the Taxation and
Revenue Department (TRD) collect the fees and take a five percent administration
fee. The bill allows the majority of the
fees to cover the necessary expenses for WCA, but the additional $0.30 cents
shall be used to fund the Uninsured Employers’ Fund.
Significant
Issues
The Workers’ Compensation Advisory Council has
approved the increase in the assessment as a funding mechanism for the
Uninsured Employers’ Fund and specifically approved this approach to the
increase.
The New Mexico Department of Transportation indicates
an increase of $900 per quarter for a total increase of $3,600 for the first
year. With an outlook of a 3 percent
increase of employees, the department indicates an increase of $108 after the
first year.
The Department of Corrections indicates it has 2,282
employees and must pay an additional $1.20 per employee, per year which amounts
to $2,738.40 per year.
Synopsis
of SFC Amendment
The Senate Finance Committee amendment to Senate
Bill 74 changes responsibility of Workers’ Compensation Administration fee
collection back to the Taxation and Revenue Department and, rather than charge
employers $2.30 cents per employee, it provides that the $0.30 cents of the
$2.00 paid by employers at the end of each quarter be deposited to the
Uninsured Employers’ Fund.
Significant
Issues
WCA indicates there are two alternate proposals
for addressing the funding of the Uninsured Employer’s Fund (henceforth,
“UEF”). The other proposal amends the
current funding language and the Tax Administration Act to make the UEF
assessment subject to the Tax Administration Act. The Workers’ Compensation
Advisory Council has approved an increase in the assessment as a funding mechanism
for the UEF in principle, and will review the specific language proposed on
Additionally, while the bill establishes a
thirty-cent fee to be paid by the employer for each employee per quarter, it
does not amend 52-5-19 from two dollars to two dollars and thirty cents,
thereby requiring that the uninsured employer fund be funded from revenues
intended for the operations of the workers’ compensation administration. There would not be any authority to collect
the additional thirty cents for the uninsured employer fund. This would have a direct, significant and
detrimental effect on funds availability for the agency.
FISCAL
IMPLICATIONS
WCA
indicates this bill will create a funding source for the UEF that is more
predictable than the present source, and will generate more income than the
current funding source generated during the first quarter of operation.
The
lack of authority to collect the additional thirty cents from employers for
each of their employees per quarter will require that the Uninsured Employer
Fund be funded from the workers’ compensation assessment, which is intended to
fund the operations of the agency. This
will have a very direct, significant and detrimental effect on funds available
for the agency (estimated $750 thousand) and the agency’s ability to carry out
its statutory mandates.
As crafted, it will reduce revenues available
for agency operations by $750,000 per fiscal year in order to fund the
Uninsured Employers Fund. In fact,
revenues would be insufficient to meet operational and uninsured fund needs.
TECHNICAL
ISSUES
Amend
52-5-19 to require the employer to be assessed $2.30 instead of $2.00 for each
employee per quarter in order to provide the assessment and collection
authority for the Uninsured Employer Fund and in order to not have a
significant and detrimental impact on funding of agency operations.
Synopsis of Original Bill
Senate
Bill 74 repeals the funding mechanism initially established for the Uninsured Employers’
Fund and replaces it with an increase in the general assessment to
employers. Instead of charging employers
$2 per quarter per employee, the bill increases the charge to $2.30 per quarter
per employee. The additional thirty
cents per quarter will be used to fund the Uninsured Employer’s Fund. Additionally, the bill changes responsibility
of Workers’ Compensation Administration (WCA) fee collection from the Taxation
and Revenue Department (TRD) to WCA.
FISCAL
IMPLICATIONS
The
fund collected approximately $62.0 in the first quarter of collections, for an
annualized rate of approximately $248.0. The proposed assessment increase
contained in this bill is a recurring expense to employers and will generate
$750.0 annually for the Uninsured Employers’ Fund. WCA indicates the bill will create a more
predictable funding source than is currently in place.
ADMINISTRATIVE
IMPLICATIONS
WCA
indicates the change in responsibility for collection of the WCA assessment
will divert substantial resources from the mandatory statutory responsibilities
of the WCA, especially since the WCA does not possess the enforcement powers contained
in the Tax Administration Act that apply to the current collection mechanism
for that fund. Without an appropriation
for personnel and infrastructure, is not within the ability of the agency to
absorb the collections responsibility under the current or proposed budget.
CONFLICT, RELATIONSHIP
WCA indicates there is an alternate proposal
coming for the Legislature’s consideration addressing the funding of the
Uninsured Employer’s Fund (SB 111). The
other proposal amends the current funding language and the Tax Administration
Act to make the Uninsured Employers’ Fund assessment subject to the Tax
Administration Act. The Workers’ Compensation Advisory Council has approved the
increase in the assessment as a funding mechanism for the Uninsured Employers’ Fund
in principle, and will review the specific language proposed on
TECHNICAL ISSUES
WCA suggests reinstating Section 2, paragraphs B
and C, striking the amended Section 2, paragraph B through the word “director”
on line 13, and striking Section 2, paragraph D.
OTHER SUBSTANTIVE ISSUES
WCA suggests retaining the collection of the WCA
assessment by TRD.
POSSIBLE
QUESTIONS
How does this affect seasonal employees and employers?
KBC/dm