A Senate committee rolled back proposed tax increases in a sprawling bill that would change rates on internet sales, car purchases, e-cigarettes and more. House Bill 6 represented a push by top Democrats in the House of Representatives to shore up the state’s finances, which now rest largely on revenue from oil and gas. But it prompted plenty of skepticism for threatening to raise taxes for many New Mexicans at a time when the state enjoys a hefty budget surplus from an energy boom. The big question now is when the bill will get a hearing in its next and last committee as the Legislature hurtles toward a noon Saturday adjournment. If the Senate Finance Committee doesn’t act on the measure until Friday, House Democrats may be left with little time to negotiate and have to choose between either accepting the Senate’s changes or nothing.
The chairman of an influential Senate committee proposes to strip out big pieces of a sprawling tax bill, scrapping a proposed increase in New Mexico’s personal income tax rates and scaling back a suggested increase in a credit for families. For backers of House Bill 6, the measure is key to making the tax system more progressive and shoring up the state’s finances before the oil industry takes another dive and New Mexico’s government is left strapped for cash again. But the idea of passing several tax increases at a time when the state anticipates a budget surplus from an ongoing oil boom has drawn plenty of criticism. Some senators on both sides of the aisle have argued the proposed tax hikes are too much, too fast — and potentially a big political liability. Sen. Clemente Sanchez, a Democrat from Grants who chairs the Senate Corporations and Transportation Committee, on Tuesday called for changes to the bill that would reduce the amount of money raised for the general fund from more than $300 million in the next fiscal year to an estimated $93 million, not including some other changes.
Gov. Susana Martinez signaled Tuesday she is not going quietly into her last year in office, opening a 30-day session of the Legislature with a State of the State address that touted issues she has pushed throughout her administration and steeling herself for one last showdown with Democratic lawmakers. The two-term Republican governor called for comprehensive tax reform but did not offer any specifics on what that might involve, urged tougher criminal sentences and raised many of the same education and economic policies she has regularly mentioned in her annual address. With the state’s finances improving, offering a reprieve from another round of budget cuts, many Democrats and Republicans alike had come to expect this monthlong session would not be marked by any particularly ambitious initiatives or changes in policy as Martinez prepares to leave office. Instead, many seemed ready to approve a balanced budget and take steps to try to stem the state’s rising crime rates. Indeed, the governor did not offer any big new ideas.
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.
Gov. Susana Martinez leaned in, and a discernible vigor crept into her voice. Speaking at a news conference earlier this month about her proposed state budget, the former prosecutor seemed in her element, discussing an issue that has come to define her two terms in office: crime. She started her presentation on the state’s spending plan talking about a crime wave, and when a reporter asked about bail reform, she eagerly lambasted new court policies as creating a “revolving door at the jail.” Yes, there was talk of tax reform and education, too. But if there is any issue Martinez has felt most comfortable railing about in front of the cameras, it is crime.
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.
If it had passed in its original form, the tax overhaul supported by the governor and legislative Republicans during the recent special session would have hurt the state. That’s the news from the finalized fiscal impact analysis done by staffers with the Legislative Finance Committee, first flagged by the Albuquerque Journal. According to the analysis, a technical error on the part of the bill’s drafters threw off revenue estimates by more than $100 million. The error had to do with the repeal of a nonprofit receipts exemption that applies to nonprofit organizations, including hospitals. The bill itself was finalized shortly before the special session began and was introduced hours after the special session came to order.
A complex tax overhaul bill failed to clear its committee, and that’s going to further complicate the special session in which legislators are supposed to address the budget in New Mexico. Rep. Jason Harper, R-Rio Rancho, presented his 430-page tax overhaul bill Thursday morning. It took him nearly an hour to describe the bill to the House Labor and Economic Development Department. “That in very high-level, broad terms is what is in this bill,” Harper said when he finished describing the bill and how it differed from a similar bill legislators already passed in March. After public comment and questions from the panel, the committee voted 6-5, on party lines, to table the bill.
Questions on what can be accomplished during a special session linger even as legislators head to Santa Fe today. The main priority for legislators is a budget. Legislators must pass a new budget after Gov. Susana Martinez vetoed the entire budgets of higher education and the Legislature. If a new budget isn’t passed before the start of the next fiscal year, which begins on July 1, New Mexico community colleges and universities will have no money. But Martinez also wants legislators to address a massive tax overhaul and confirm two University of New Mexico regents.
Gov. Susana Martinez would be willing to sign a food tax into law if it were part of a larger tax reform. The governor told media this after a speech at the Economic Forum of Albuquerque at the Hotel Albuquerque Wednesday. Purchases of food are exempt from the state’s gross receipts tax and have been since 2004. Those who support the exemption say the tax has a larger impact on poor New Mexicans, since food represents a higher percentage of their spending. Martinez did say she would oppose the food tax as a “standalone piece,” according to both the Albuquerque Journal and the Santa Fe New Mexican.