May 24, 2017

Legislature advances budget-balancing, tax measures

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A House panel passed a bill to restore funding vetoed by Gov. Susana Martinez for next year for higher education, courts and the state Legislature Wednesday afternoon. Meanwhile, tax packages that would increase taxes on things like internet sales and gasoline also moved forward.

The budget vote came mostly on party lines save for state Rep. Sarah Maestas Barnes, R-Albuquerque, who joined Democrats in supporting it. Maestas Barnes was also the lone Republican to vote for a failed override attempt of Martinez’s budget vetoes earlier in the day.

In total, the bill appropriates roughly $765 million—$745 million for higher education and $19 million for legislative offices—for the next fiscal year, which begins July 1. Martinez last month vetoed the entire budgets for both and criticized the Legislature for raising taxes on gas, auto sales and introducing a tax on internet sales.

The new bill relies on increases in gross receipt taxes on hospitals using county-supported Medicaid funds, which is currently part of a different bill. State Rep. Larry Larrañaga, R-Albuquerque, voiced concerns about this.

“I don’t know if we’ve met enough of the administration’s parameters to walk out and call it a day,” he said.

State Rep. Paul Bandy, R-Aztec, raised similar concerns.

“It’s really thin without tax increases on internet sales and hospitals,” Bandy said. “I don’t have a problem with it, but I’m not sure if the governor does.”

Larrañaga also took issue with how the bill appropriates $400,000 for a study of comprehensive reform in the interim.

“That implies there is going to be no tax reform in the special session,” he said.

Martinez is pushing for a bill this special session similar to Rep. Jason Harper’s measure earlier this year overhauling the state’s gross receipts tax code by, among other things, eliminating loopholes and lowering the overall rate.

Harper introduced his bill Wednesday afternoon, which he described as 430 pages. He said, in a Facebook video, most of the bill is changing the name of the gross receipts tax to a sales tax.

An employee in House Clerk’s office remarked, “Oh my God,” when Harper walked in with the massive bill.

House Speaker Brian Egolf, D-Santa Fe, called the bill dead on arrival for the special session and is advocating for the interim study of the issue, saying he’d be willing to come back in another special session to address the issue once the study is done.

Egolf has argued there was not enough time for legislators to study the bill.

Patricia Lundstrom, a Democrat from Gallup and one of the sponsors of the funding bill that passed today, mentioned the GRT on internet sales and hospitals as “the beginning of tax reform.”

“In terms of a comprehensive tax reform bill, I haven’t seen it,” she told Larrañaga. “I have not been in any conversation to see anything in writing about tax reform.”

Before the vote, New Mexico State University President Garrey Carruthers and representatives of universities and community colleges spoke of the impact of Martinez’s prior veto of the entire higher education budget.

Carruthers said between 350 and 400 NMSU students haven’t re-enrolled in classes by the deadline for next semester because of the veto.

“A little over 5 percent of [all NMSU students] said they were waiting to see if the state was going to fund higher education,” Carruthers, a former Republican governor of New Mexico, said.

He also said the veto cost the university prospective faculty and that competitors are attempting to “poach” current faculty more than usual because of the situation.

Carruthers even instructed lawmakers to “remember the words of Rodney King, who said, ‘Can’t we just learn to get along together?’”

Committees passes tax bill

The House Tax and Revenue Committee passed a tax reform bill sponsored by Democrats Wednesday afternoon.

The bill makes broad adjustments to aspects of the state’s gross receipt tax, while also diverting money that would normally go to legislators’ retirement fund.

Sponsored by Rep. Carl Trujillo, D-Santa Fe, the bill aims to start collecting gross receipt taxes from out of state, internet retailers like Amazon. Republicans on the panel expressed concerns that third-party sellers would be taxed the same as larger companies like Amazon. Rep. Jason Harper, R-Rio Rancho said through his own research he concluded that gross receipt taxes paid by third party sellers is too complicated.

“It’s going to take a lot more thought and a lot more work to get it right,” Harper said.

Democratic members, including Trujillo, argued an issue of fairness to companies like Amazon if gross receipt taxes were not charged across the board.

Shortly after the House Tax and Revenue Committee adjourned, the Senate Finance Committee swiftly passed an identical bill, with significantly less debate.

The Senate Finance Committee also passed legislation that would essentially move severance tax bond money to the general fund. This would essentially borrow money to balance the budget, something Senators were unhappy about, but said was necessary.

After passing the wrong draft, the committee had to go back into session and pass the correct draft. Both votes were unanimous.

Matthew Reichbach contributed to this story.

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