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 a vailable on the NM Legislative Website (legis.state.nm.us).
Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and
attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.
F I S C A L I M P A C T R E P O R T
SPONSOR Varela
ORIGINAL DATE
LAST UPDATED
1/18/2008
HB 10
SHORT TITLE
Public Employee Salary Increases
SB
ANALYST Moser
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY08
FY09
$140,458.1
Recurring
General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
Relates to House Bill 7
SOURCES OF INFORMATION
LFC Files
Responses Received From
State Personnel Office (SPO)
Higher Education Department (HED)
SUMMARY
Synopsis of Bill
House Bill 10 appropriates one hundred forty million four hundred fifty-eight thousand one
hundred dollars ($140,458,100) from the general fund for the purpose of providing salary and
benefit increases to public employees based on employee job performance. The salary increases
apply to public school employees, faculty and staff at post-secondary educational institutions,
executive classified employees, executive exempt employees, legislative permanent employees,
judicial employees, district attorney employees and state police.
The bill ensures that employees whose salaries are funded from non-general fund appropriations
will be covered by the same salary increase provisions in the bill. It also provides benefit
increases for public and higher education employees and funds increasing the employer
contribution to the educational retirement fund by three-fourths of a percent
FISCAL IMPLICATIONS
The appropriation of $140,458,100contained in this bill is a recurring expense to the General
Fund. Any unexpended or unencumbered balance remaining at the end of Fiscal Year 2009 shall
pg_0002
House Bill 10 Ė Page
2
revert to the appropriate fund. The amount in the bill is based upon consensus numbers reached
with DFA regarding general fund costs for classified employees.
SIGNIFICANT ISSUES
House Bill 10 proposes a 4 percent salary increase for state employees, and a 3 percent salary
increase for all public and higher education employees. The bill also provides for an additional 2
percent increase for staff attorneys of the offices of the district attorneys and an additional 1
percent increase for public education secretarial, clerical, technical assistant, custodial warehouse
and delivery employees. The bill funds the statutorily mandated 0.75 percent increase for
educational retirement contributions. The salary increases would be effective July 1, 2008.
The State Personnel Office (SPO) indicates that this bill does not reflect the pay package
negotiated between the Governor and Labor. Under the Public Employee Bargaining Act, the
agreements negotiated between the executive and the unions must be included in the Governorís
budget request. The Legislature, however, is not mandated or obligated to comply with the
agreement.
The Governorís recommended pay package provides a 2% of pay band midpoint salary increase
in July 2008 and a 1% to 3.5% of actual pay increase in January 2009. The Governorís pay
package would cost the equivalent of 2.9% for FY09, but would result in average salaries
projected to be slightly higher (4.15%) by the end of the fiscal year. Under the Governorís pay
package 36.2% of classified employees (those with a compa-ratio less than 94%) would realize a
salary that is greater than 4% higher by the end of FY09.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
House Bill 10 conflicts with HB 7.
TECHNICAL ISSUES
SPO expresses concern that the effective date of the salary increase is July 1, 2008 which is not
the effective date of the pay package negotiated between the Governor and Labor. This is
different from past legislation that stated salary increases would be effective the first day of the
next full pay period following July 1 of a specified year. In line with the prior language the 2006
and 2007 salary increases became effective July 15 and July 14 which meant that they did not
reach employees paychecks until the end of July.
SPO indicates concern with the terminology ďbudgeted positions" and employees in temporary
budgeted positions receiving a salary increase. For example, there are many budgeted temporary
positions for employees who work in the PIT processing tax returns during tax season at the
Taxation and Revenue Department. Usage of the term would restrict increases to those
employees whose positions are in fact budgeted by the legislature and not employees in
unbudgeted and unauthorized positions.
GM/mt