Committee advances substitute for paid family leave bill after hours of debate; original HB11 receives do‑not‑pass recommendation

A House committee on Wednesday advanced a substitute version of House Bill 11, a proposed paid family and medical leave measure the sponsors rebranded as the “Welcome Child and Family Wellness Leave Act,” while issuing a do‑not‑pass recommendation on the original bill. The committee vote to move the substitute and recommend against HB11 was 6‑yes, 5‑no.

The substitute would create two funds: a Family Wellness Leave Fund, financed by payroll premiums, and a state‑funded Welcome Child Fund designed to provide short, targeted support for new parents. Sponsors and advocates said the package balances broad leave coverage with lower premiums for employers and employees; opponents — including small businesses, chambers of commerce and Medicaid providers — warned of added costs, administrative burden and staffing strains for health‑care and caregiving employers.

Why it matters: The substitute alters the program’s financing and benefits in ways that affected how business groups, local government associations and labor organizations evaluated it. Supporters said the changes reduce employer premiums and add state support for the earliest months after birth; opponents said the bill still functions as a new payroll tax and could exacerbate workforce shortages in sectors such as home‑health, long‑term care and restaurants.

What the substitute would do - Family Wellness Leave Fund (payroll premium): The substitute sets an initial premium of 0.2 percent of wages for employees and 0.15 percent of wages for employers for the family wellness portion. Employers with fewer than five employees remain exempt from the employer premium. - Family leave benefits: The family wellness portion would provide up to six weeks of paid leave for qualifying reasons (medical leave, safe leave, military exigency, bereavement and foster placement), with a certification process handled by the Department of Workforce Solutions (DWS). - Welcome Child Fund (state appropriation): The substitute creates a separate, state‑funded Welcome Child Fund to provide a $3,000 per month refundable benefit to one parent for up to three months after a birth or adoption, and grants 12 weeks of job protection for each parent to be taken within one year of birth or adoption. Sponsors said the Welcome Child Fund would be paid through appropriations from the Early Childhood Education and Care Department (ECCD) budget, not from the payroll premium. - Timing and solvency safeguards: Sponsors said benefits would begin in 2028. The bill requires an actuarial study (cited by sponsors as forthcoming) and gives the DWS secretary limited authority to adjust premiums by 0.1 percentage points with statutory solvency tests and reporting.

Public testimony and stakeholders Supporters and users: Labor and caregiving advocates, AARP New Mexico, health‑care providers and some small business owners told the committee paid leave would help retention and allow workers to care for sick family members or recover from serious illnesses. John Lipshutz of the New Mexico Federation of Labor thanked sponsors for long work on the bill; a representative from AARP focused on unpaid family caregivers, and clinicians and cancer survivors urged leave access during long treatments.

Opponents and business concerns: Business groups and employers raised the most frequent objections. Patsy Romero, president and CEO of Santa Maria El Mirador, said the proposal “doesn't factor in the real cost for Medicaid providers” and that covering absent staff requires costly overtime. Terry Cole of the Greater Albuquerque Chamber and Carla Sonntag of the New Mexico Business Coalition warned the proposal imposes a payroll tax during a period of inflation and could force increases in prices or business closures. Several restaurant owners, small employers, and rural employers testified that long leaves are difficult to cover and that temporary staffing options are limited or expensive.

Operational and fiscal questions raised in committee - Administration: DWS testified it expects to hire staff to operate the program (the sponsors and secretary estimated about 219 staff positions and substantial IT investment). One witness said initial IT setup could be roughly $17 million of an estimated year‑one operating cost near $25 million and ongoing costs near $23 million, which sponsors said would come from the family wellness fund, not ECCD appropriations for the Welcome Child Fund. - Fraud prevention and appeals: Sponsors described a certification process (health‑care provider documentation, police reports for safe leave, military orders for exigency) and a DWS appeals process; employers would receive notice and would have a time window to challenge approvals. Sponsors warned that improper claims risk suspension of future benefit access. - Workers’ compensation and coordination: Insurers and workers’‑comp advocates warned about double recovery and urged clear coordination language. Sponsors said the bill requires DWS rulemaking to reconcile concurrent eligibility and that they had worked with workers’ compensation counsel to address the concern. - Coverage gaps and opt‑outs: The committee substitute retains an opt‑out for employers that can demonstrate a “substantially similar” plan; sponsors said rules and an advisory committee would clarify that test. Tribal governments may opt in; the substitute does not mandate tribal participation.

Legislative actions and votes - Matthews amendment (carve‑out for community service/care providers): Representative Matthews offered an amendment to exempt certain Medicaid‑funded care providers from the employer premium (providers would still remit the employee premium). That amendment was debated and then tabled by the committee in a roll call (motion to table passed 6‑5). Supporters of the amendment cited low reimbursement rates to Medicaid providers and warned of service reductions if employer costs increase. - Final committee action: The committee voted 6‑yes, 5‑no on a motion described in the hearing as “do not pass HB11; do pass the House Commerce & Economic Development Committee substitute for HB11.” Recorded yes votes advancing the substitute were Representatives Veil La Cruz, Lehi, Patahone, Serrato, the vice chair and the chair. Recorded no votes (opposing advancement of the substitute and supporting HB11 not pass recommendation) included Representatives Armstrong, Hernandez, Mason, Matthews and Murphy.

Quotes “The employer cost in HB11 ... doesn't factor in the real cost for Medicaid providers like myself to cover this unfunded mandate,” said Patsy Romero, president and CEO of Santa Maria El Mirador, during public comment. “When I have a staff on leave, I have to cover their position … with overtime pay.”

“Paid family medical leave is a protective factor in and of itself against violence,” said Jess Clark of the New Mexico Coalition of Sexual Assault Programs, urging support for safe‑leave provisions.

“We are separating the funds so the cost to employers is lower,” a sponsor told the committee, describing the 0.2 percent employee and 0.15 percent employer premium split for the family wellness portion while the Welcome Child Fund is paid through ECCD appropriations.

What’s next The committee’s action advances the committee substitute (with the committee recommending do‑not‑pass on the original HB11). The substitute will proceed to subsequent legislative steps (floor consideration and appropriations as required). Sponsors repeatedly said they expect — and the statute requires — rulemaking by the Department of Workforce Solutions, an actuarial review and further fiscal analysis before benefit payments begin. Lawmakers and stakeholders signaled additional floor‑level debate likely, especially on the carve‑out and implementation details for caregivers and Medicaid providers.

Ending note The hearing reflected deep divisions between advocates for a broad, state‑level paid‑leave program and business and local government groups worried about costs and administration. The committee’s substitute attempts to split costs between a smaller premium program and a state‑funded welcome benefit; whether that split will address concerns about solvency and sectoral staffing pressures will be a central point of debate going forward.