New Mexico’s government has not raised the tax on gasoline since 1993. This year, that could change. A sweeping tax bill sponsored by Democrats in the state House of Representatives would increase the tax on gasoline by 10 cents a gallon, from 17 cents to 27 cents, starting in mid-2020. The special fuels tax would go up a nickel, too, from 21 cents to 26 cents. Backers say New Mexicans do not have to look any further than the wear and tear on the state’s highways for a reason to raise the tax, proceeds of which have traditionally paid for road maintenance.
Senate Democrats said Tuesday that New Mexico’s future looks bright — partly because it doesn’t include outgoing Republican Gov. Susana Martinez, who also struck a combative tone at the start of the 30-day legislative session. “There’s a new day on the horizon for the state of New Mexico,” said Sen. Howie Morales, D-Silver City, who delivered the response from his caucus to Martinez’s final State of the State address. “Soon, we will have a new leadership team that will guide the state in providing more jobs, better classrooms, protection for our environment [and] safer places for our communities to raise our families and lead prosperous lives,” he said. “New Mexico has been on too many of the lists, at the bottom, for far too long.” In her speech, Martinez, who leaves office at the end of this year, focused on issues she has been working on since she was first elected governor in 2010.
Members of the Senate Finance Committee say they have reached an agreement on a package of taxes and fees that would help New Mexico resolve its projected budget deficit and shore up cash reserves to about 3 percent next year. The proposal amends several provisions of House Bill 202, including a tax that was opposed by doctors and hospitals. The Senate measure also would incorporate a gasoline and diesel tax increase that has already passed the Senate as a separate bill. By bringing all the elements together, Sen. John Arthur Smith, D-Deming, the finance chairman, hopes to stabilize the $6.1 billion general fund and guard against further credit downgrades. It also would buffer the state against expected federal cuts in education and health care.
Senate Minority Leader Stuart Ingle was in office 15 years ago, the only time the Legislature overrode a governor’s veto of the entire state budget. That showdown pitted Republican Gov. Gary Johnson against a Legislature controlled by Democrats. Ingle, R-Portales, said he is confident the impasse this year over spending and tax increases between majority Democrats in the Legislature and Republican Gov. Susana Martinez will not be a repeat of what happened in 2002. He said all parties agree on the priorities. Namely, the state needs to boost revenue to pay for education and day-to-day services included in the proposed $6.1 billion operating budget and stash away more in savings to help its credit rating.
The New Mexico Senate, hoping to improve state roads and rebuild cash reserves, approved a bill Thursday that would increase the state gasoline tax for the first time in more than 20 years. But the bill has little chance of becoming law. “If it reaches the governor’s desk, she will veto it,” said Chris Sanchez, a spokesman for Republican Gov. Susana Martinez. An override of Martinez’s veto is unlikely because the tax bill received support from only three of the Senate’s 16 Republicans. The measure, Senate Bill 95, would raise about $180 million annually through a range of taxes and fees.
Lawmakers looking for every possible penny of new revenue to balance the state budget moved ahead with an omnibus tax package Wednesday over the objections of hospitals and medical providers that claimed paying more to the state would harm health care in New Mexico. House Bill 202 is part of an effort to bring in revenue from the fastest-growing part of the state’s economy — physicians, hospitals and clinics, most of which now pay little or no gross receipts tax. Rep. Carl Trujillo, D-Santa Fe, said his bill equalizes the tax among the entire health care sector at just over 3 percent — and that amount is paid on just 40 percent of patient revenue. “I don’t know how you can be more fair than everyone in this profession paying the same,” he said. The measure would raise $250 million for the general fund and restore cash reserves to about 4 percent, Trujillo said.
Republicans and Democrats joined together Friday to advance a bill that would allow cities and counties in cash-strapped New Mexico to find out if voters are willing to pay more at the gas pump in order to support better roads and bridges. Lawmakers have had difficulty finding agreement on any tax issue the past two years, but HB 63 seems headed toward approval. The House Taxation and Revenue Committee gave it a unanimous thumbs up. Under the proposal, voters could impose a local-option tax on gasoline and diesel fuel sales to residents and visitors alike to fund road work. Sponsored by Reps.
New Mexico’s Road Fund was once considered a pot of money that would keep growing as more people in the state bought higher-priced cars and trucks, then drove extensively for business and recreation. Part of that has come to pass. With three interstate highways crossing New Mexico, increased trucking activity and record tourism, drivers are logging more miles. But they also are buying less gasoline, and the fund for road improvements and maintenance has stagnated. “We’ve seen an increase in traffic in New Mexico,” said state Rep. Larry Larrañaga, R-Albuquerque, a member of the House Transportation Committee.
Moderately low gas prices and an increasingly dire budget situation in the state has lawmakers eyeing new sources for revenue. Gov. Susana Martinez has adamantly opposed any new or increased taxes, but some lawmakers are looking to grab several more cents from drivers at the gas pump. At least two state senators and one Albuquerque city councilor have introduced legislation to increase gas taxes to help pay for road repairs and infrastructure. The move appears to be a trend in several other states. New Mexico state Sen. John Arthur Smith, D-Deming, chairs the Senate Finance Committee and is considered one of the most fiscally conservative Democrats in Santa Fe.
Delaying or freezing corporate income tax cuts and across-the-board budget cuts are two of the most popular proposals for bridging the state’s large budget deficit. That comes from a poll conducted by Public Policy Polling for NM Political Report. Respondents were asked to choose from a list of five options for balancing the budget. The options were “Delaying or freezing corporate income tax cuts,” “bringing back taxes on food and medicine,” “increasing the state gasoline tax,” “cutting education spending” and “enacting across-the-board spending cuts.”
After choosing their top choice, respondents were also asked to choose a second-best option from the same list. In both cases, respondents saw delaying incoming corporate income tax cuts delay and enacting across-the-board spending cuts as the two most popular choices.