New Mexico legislators are seeking to overhaul a key part of the state’s tax code in next year’s legislative session, but doing so will be difficult.
That’s according to members of the New Mexico Legislature’s interim Revenue Stabilization and Tax Policy Committee after they heard a presentation from state experts on tax reform efforts and an update on an independent study on tax reform in the state. Legislators have been looking at reforming the state’s Gross Receipts Tax, a key source of revenue. Earlier this year, the state hired Ernst & Young, in partnership with Georgia State University, to take a look at how changing the state’s GRT might affect revenue. Legislative Finance Committee analyst Jon Clark said analysts will examine a tax reform effort sponsored during this year’s special legislative session by Rep. Jason Harper, R-Rio Rancho. Harper took a crack at tax reform when he introduced House Bill 8, a massive 400-page bill which would have lowered the gross receipts tax while eliminating most deductions.
During September’s special legislative session, lawmakers agreed on fixes that added about $23 million in revenue. That was a start, but not nearly enough to solve the state’s budget crisis. On Wednesday, state legislators received little good news about the state’s revenue stream during a committee meeting. Even with that help, New Mexico’s bean counters dropped their revenue projections for the current fiscal year from previous estimates by more than $130 million. The state’s current fiscal year began in July and ends next June.
A high profile legislative leader and the State Treasurer are urging the governor to call a special session to deal with a worse-than-expected fiscal situation in the state. Senate Finance Committee Chairman John Arthur Smith said in a capitol press conference that lawmakers need to inject an additional $200 million to keep the current budget, which went into effect this month, balanced. Smith said he thought the state would face a shortfall of $500 million in next year’s budget. These predictions came after the most recent numbers showed revenues fell $58 million in May 2016 when compared to May 2015. Smith, D-Deming, predicted state revenues this year will amount to $5.7 billion, down from the $6.1 billion signed into law earlier this year.