Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Senate Finance Committee
LAST UPDATED
ORIGINAL DATE 3/13/2025
SHORT TITLE State Fees & Funds
BILL
NUMBER Senate Bill 535
ANALYST Gaussoin
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected Workers’ Comp
Employer
Contributions
and Employee
Deductions
$1,479.0 $1,479.0 $1,47 9.0 $2,253.0 Recurring
Workers
Comp Admin
Fund
Telecommunicati
ons Relay
Service
Surcharge
$892.0 $892.0 $892.0 $892.0 Recurring
Telecommuni
cations
Access Fund
Telecommunicati
ons Relay
Service
Surcharge
$3,570.0 $3,570.0 $3,57 0.0 $3,570.0 Recurring
988 Lifeline
Fund
Telecommunicati
ons Relay
Service
Surcharge
$138.0 $138.0 $138.0 $138.0 Recurring
TRD
Operational
Fund
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
Relates to Senate Bills 264 and 372. Relates to a transfer in the General Appropriation Act
Sources of Information
LFC Files
Agency Analysis on Related Legislation Received From
Workers’ Compensation Administration Commissioner for Deaf and Hard of Hearing Persons Because of the short timeframe between the adoption of this substitute and its amendment and its
subsequent hearing, LFC has yet to receive analysis from agencies. This analysis could be
updated if that analysis is received.
Senate Bill 535 – Page 2
SUMMARY
Synopsis of Senate Bill 535
Senate Bill 535 (SB535) increases workers’ compensation fees and the telecommunications relay
service surcharge, creates a nonreverting fund to support the 988 crisis intervention hotline, and
diverts most of the telecommunications relay service surcharge to the new fund.
The bill increases the quarterly employer payroll contributions and employee payroll deductions
deposited into the workers’ compensation administration fund starting in July 2025 and raises
them to higher set amounts in 2028 and 2033.
SB535 also raises the telecommunications relay service surcharge, a tax on customer charges for
intrastate telephone services, from 0.33 percent to 1.66 percent. The bill diverts 80 percent of the
surcharge revenue to a newly created fund to support the 988 Lifeline, a hotline for emotional,
mental, or substance use support and crisis intervention. The revenue in the fund is currently
used to support telecommunication services for the deaf and hard of hearing, with the
Commission for Deaf and Hard-of-Hearing Persons authorized to draw 10 percent of the annual
deposits into the fund each year for administration. The bill would authorize the commission to
draw 100 percent of the deposits.
The effective date of this bill is July 1, 2025.
FISCAL IMPLICATIONS
Workers’ Compensation Assessments. The bill increases the quarterly employer payroll
contributions and employee payroll deductions deposited into the workers’ compensation
administration fund by 11.6 percent over current rates starting in FY26, by 17.7 percent starting
in FY29, and by 23.2 percent in FY34. The revenue table reflects those percentage increases over
the current revenue of $12.75 million without consideration of the workforce growing or
shrinking.
Telecommunications Relay Service Surcharge. The Commission for Deaf and Hard-of-
Hearing Persons reports the increase to the surcharge would put total revenue at about $5.6
million, or about $4.6 million more than the tax generates now. The Taxation and Revenue
Department, which collects the surcharge revenue, is authorized to set aside 3 percent for
administration, or about $138 thousand. Of the remaining about $4.5 million, about $3.6 million
would be deposited in the 988 Lifeline fund and $892 thousand would be deposited into the
telecommunications access fund. The commission contends being able to draw 100 percent of
the deposits for administration would not meaningfully increase the amount available to the
agency but would deplete the fund more quickly.
The revenue generated by the telecommunications relay service surcharge has steadily declined
partly due to, according to the commission, a 40 percent drop in the price of unlimited cell phone
plans since 2010. If that decline continues, the revenue generated by the surcharge will also
decline. The amounts estimated in the revenue table do not reflect that potential loss.
This bill creates a new fund and provides for recurring distributions to the fund from an existing, Senate Bill 535 – Page 3
although increased, revenue source. LFC has concerns with including continuing distribution
language in the statutory provisions for funds because earmarking reduces the ability of the
Legislature to establish spending priorities.
SIGNIFICANT ISSUES
Workers’ Compensation Assessments. The base assessment for workers’ compensation has
not increased since it was first established in 1993. Revenue from the $4.30 per employee per
quarter assessment is used to operate the Workers’ Compensation Administration (WCA) and
consists of a $2.30 employer contribution matched with a $2 employee payroll deduction. While
total employment in New Mexico in FY24 was 4 percent higher than prepandemic FY19 levels,
revenue into WCA has remained relatively flat.
Revenue was $13.83 million in FY19, $13.91 million in FY24, and is projected at $13.94 million
for FY26. The House Appropriations and Finance Committee substitute for House Bills 2 and 3
(the General Appropriation Act) supplements the revenue from the assessment with $1 million
from the balance in the workers’ compensation administration fund, thereby using nonrecurring
funding for a recurring cost. The expected depletion of the fund means the Workers’
Compensation Administration will be unable to maintain current spending levels without
additional revenue. The substitute for House Bills 2 and 3 includes a one-time transfer of $6
million from the general fund into the workers' compensation fund, enough to sustain the
department through FY29.
WCA reports increases proposed in Senate Bill 264, the same as those proposed in SB535, are
based on agency projections:
Research was conducted to anticipate the impact on raising the fee on micro, small,
medium, and large New Mexico businesses. The monetary values provided in SB264 are
incremental in nature, staggered over a number of years, and permit the WCA to sustain
operational needs through at least FY34, at which time the issue can be reviewed by the
Legislature. The incremental raises outlined in SB264 will not require the Legislature to
review WCA funding until FY 2036.
Telecommunications Relay Surcharge. The Commission for Deaf and Hard of Hearing
Persons reports the revenue collected from the telecommunications surcharge dropped from $4
million in FY11 to $1 million in FY24, and the agency has had to rely on transfers from balances
in the fund and general fund appropriations for its operations budget. The agency received about
$1.2 million in surcharge revenues for FY25, supplemented with $1.7 million from the general
fund about $400 thousand in balance transfers. The commission notes the surcharge was
intended to fully support the commission when the commission was created in 1991.
In addition, the $3.6 million that HB535 would raise for the 988 Lifeline fund might be
insufficient for the program. The crisis line was among those launched nationwide in 2023 with
federal funds with the expectation states would assume the costs after the first year. The program
was supported in FY25 with a $6 million appropriation in the General Appropriation Act. The
commission notes revenue for the 988 Lifeline fund is also at risk of declining if the revenue
generated by the telecommunications relay service surcharge continues to decline.
As an alternative to increasing the percentage of the surcharge, the commission supports
changing the fee to a set amount of 51 cents per telecommunications services bill. That approach Senate Bill 535 – Page 4
raises about $13 million a year for the 911 emergency services fund.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
HB535 duplicates a section of Senate Bill 264, which raised the workers’ compensation fees
along with hunting and fishing license fees and environmental services fees. The bill conflicts
with Senate Bill 372, which also raises the telecommunication relay services surcharge but at a
fixed rate per transaction rather than a percentage. HB535 also relates to a one-time transfer of
$6 million from the general fund to the workers’ compensation administration fund in the House-
adopted version of the General Appropriation Act.
HG/SL2