State defends higher unemployment taxes

Businesses questioning insurance rate increases

SANTA FE — New Mexico labor officials are responding with reassurances to an onslaught of complaints about increased tax rates on businesses to support unemployment insurance. In addition, the state intends to extend the time employers can file appeals if they suspect inappropriate tax increases.

A long list of business groups including the New Mexico Business Coalition began writing to the Department of Workforce Solutions in February to express concern about calculations for increased unemployment tax rates and premiums.

They are questioning the state’s compliance with a state pandemic relief law that omits any layoffs from March 2020 through June 2021 from consideration in setting insurance rates. The provision was enacted during a special legislative session in June 2020.

Workforce Solutions Department spokeswoman Stacy Johnston said rate changes are based on a threeyear average that can increase even as the state abides by the blackout period.

“A tax rate may have gone up due to benefit charges that took place in the three years prior to March 1, 2020,” Johnston said in an email. “This is the most likely cause for an increase based on our review.”

Rate notices come with a 30-day deadline for appeal, but all deadlines have been extended to May 30 as a courtesy, she said.

A review by Workforce Solutions found no apparent miscalculations in business tax rates tied to unemployment insurance.

Out of 47,000 recent rate notices to businesses concerning unemployment insurance, roughly 15% or 7,000 involved rate increases. About 9,000 businesses saw decreases, Johnston said.

New Mexico Business Coalition President Carla Sonntag said many businesses that scaled back as a result of pandemic-related public health orders are among those experiencing rate increases.

“The bottom line is we shouldn’t be going through this,” she said.

Sonntag said she contacted state prosecutors and the state auditor’s office because she wasn’t getting satisfactory answers from the Workforce Solutions Department and former Secretary Bill McCamley, who left the agency last week.

State Auditor Brian Colón said Monday that a review by his office is underway.

“We’ve received enough complaints that we’re concerned that the issue is widespread,” he said. “So we are working very closely with Department of Workforce Solutions to get to the bottom of the matter.”

George Gundrey, owner of three restaurants including Tomasita’s in Santa Fe and Albuquerque, said he was puzzled about the cause of rate increases on unemployment insurance, including a four-fold increase at one restaurant. He has filed an appeal.

He said employment at his restaurants shrank from about 220 people to 45 in the depths of the pandemic while serving only take-out meals.

“They haven’t gotten back to me, I had to submit my payment at a higher rate last week,” he said.

Gundrey said the financial anxiety also is linked to newly approved legislation for mandatory sick leave and a veto by Gov. Michelle Lujan Grisham that called off a $600 million contribution in federal aid to the state unemployment insurance trust.

Lujan Grisham said the administration needs guidance first from the U.S. Treasury before that move can be made to avoid future payroll taxes.