I wanted to follow up on emails and discussions I have seen in relation to HB 202. We have been working on this bill for about 3 weeks now in conjunction with the House of Representative members and Senate Finance Committee members. I wanted to provide some clarity to this bill as it has much larger impacts than what was reported to GRMC Employees. The discussions and emails focused on a hit to hospitals but here is a rundown of all House Bill 202 (HB 202) does.

Before I begin sharing information on HB 202 I want to update each of you on the situation the State of NM is in financially. We had to begin the 2017 Session by balancing our budget for this current fiscal year as we had a shortfall. Schools, agencies and programs all experienced cuts to shore up the budget. Now as we work on the Fiscal Year 18 budget, we find ourselves in a budget shortfall of nearly $300 Million and only 1% reserves. Without any revenues being raised, in order to meet our constitutional obligation of having a balanced budget, we would be forced to cut an additional $300 Million from Schools, Law Enforcement, pay for State Employees and Teachers, Medicaid, and the list goes on. HB 202 is a bill trying to raise revenues in order to decrease the cuts to New Mexico areas and specifically Medicaid matches in which we get $4 back for every $1 we put in.

What HB 202 proposes to do as it stands currently in Senate Finance:

1) Close Internet Sales Loopholes
a. These loopholes put Local Businesses at a disadvantage and this helps level the playing field for them.
b. This was critical in raising $20-40 Million as businesses such as Amazon have recently voluntarily agreed to pay these revenues.
c. Had HB 202 been killed or voted down, there would have been no incentive or willingness for Amazon (and soon to be others) agree to pay these revenues.

2) Increases Motor Vehicle Excise Tax from 3% to 4%.
a. 30 years ago this excise tax was raised from 2% to 3%.
b. This increase still puts us well below surrounding States.
c. Raises $50 Million

3) Weight Distance Tax Program
a. Raises $63 Million!
b. Raises registrations for the 700,000 trucks traveling through NM to $90
c. This still puts us well below registration fees of surrounding States

4) Increase Gasoline Tax - Raises $185 Million
a. These dollars are earmarked for New Mexico Roads and Bridge Maintenance ($55 Million) .
b. The jobs this will create and public safety necessitates funding stream used as an economic driver
c. $130 Million will go to reserves (currently at a lowly 1% and a risk to our bond rates).

5) Makes Non Profit & For Profit Hospitals on level playing Field as far as rates (Governor required this language as an equity issue)
a. Raises $80 Million for General Fund
b. Hospitals will benefit greatly as they will only be taxed of Gross Receipts at 40% and to be dropped to 35% in 1 year, meaning the hospitals gain from 60% Deduction and in one year a 65%
Deduction.
c. Furthermore, from the $80 Million generated
i. $26 Million will go towards Medicaid Match and will generate $104 Million for Hospitals (for every dollar we put in Medicaid, we get 4 dollars matched back)
ii. From the $26 Million stated above, hospitals under 100 beds (Like GRMC) will receive a higher Medicaid rate reimbursement with an additional $5 Million directed specifically at rural hospitals generating $20 Million for rural hospitals.

In total HB 202 Raises approximately $355 Million much needed dollars for our State. The bill was never a direct attack on hospitals and simply put all options on table to generating revenues. As it came over to the Senate, individuals like Rep. Carl Trujillo and Rep. Rudy Martinez were instrumental in suggesting amendments to secure revenue while protecting rural hospitals. Had this bill been voted against or killed in House of Representatives, we would not have had the opportunity in the Senate to fine tune it to best assist our healthcare needs. A vote against HB 202 in the House was a vote for deeper cuts to Medicaid Match, Education, Law Enforcement, State Agencies, Local Economic Development, Higher Education (WNMU) for example.

I want to personally thank Rep. Rudy Martinez for understanding the process and understanding the need to have the bill proceed to Senate intact in order to allow us to meet the needs of the State. Had the Hospital portion been amended out, the bill would have unraveled as other interests would have then sought to be amended out too. It would have made it much more difficult and nearly impossible to place the hospital benefits back in HB 202. I understand it was and is a complex process and information you may have received was focused on harm to hospitals, but I can assure you the benefits GRMC and other hospitals will be receiving was part of the discussion.

Where HB 202 sits now is in the Senate Finance Committee (Chair Sen. Smith - Deming and I sit on this committee). We will vote on this today and have agreement and support from the Hospital Association. It will then go to the Senate Floor then onto Governor's Desk for signature or veto.

Hope this clears up misconceptions that may have been out there and the purpose of such an important revenue bill.

Sincerely,

NM Sen. Howie Morales, District 28