A House committee voted Saturday night to reject a bill that would delay a corporate tax cut for two years.
The corporate tax delay, which narrowly passed the Senate the night before as part of a wider budget package, would have saved nearly $13 million in the current fiscal year and more in the next fiscal year according to analysis by the Legislative Finance Committee.
The Taxation and Revenue Department, part of Gov. Susana Martinez’s administration, estimated it would save much less, saying it would be $5 million in the current fiscal year and again less than the LFC predicted in the next.
“We are not asking for a tax increase,” Rep. Bill McCamley, the Las Cruces Democrat who carried the bill on the House side, said. “We are merely asking that we delay this tax. Help us out.”
The Ways and Means committee instead largely agreed with business groups and the Martinez administration that businesses need predictability to be encouraged to locate in New Mexico.
All Republicans on the Ways and Means Committee voted to table the bill, along with Rep. Idalia Lechuga-Tena, D-Albuquerque. All other Democrats voted against tabling the bill.
Corporate tax bill
Committee chair Jason Harper, R-Rio Rancho, in what he admitted was an imperfect analogy, compared the corporate tax cut to a small business.
“If you’re a small business and your revenues are going down, they’re not what they predicted, the last thing you want to do is cut your advertising budget,” he said.
Rep. Jim Trujillo, D-Santa Fe, said the corporate tax cut reminded him of the personal tax income decrease under Gov. Bill Richardson in the early 2000s. And he recalled something former Taxation and Revenue Committee Chair Max Coll told the Democratic caucus.
“He told at least the Democratic caucus ‘don’t give up your base, you’re going to hurt yourself,’” Trujillo recounted. “‘You’ll never recover it.’”
As in the Senate, Taxation and Revenue Department Secretary Demesia Padilla opposed the delay.
“We’re sending the message that New Mexico cannot be trusted,” she said. “For $5 million.”
Business interests oppose delay
“Predictability does matter. And it matters a great deal to business,” Terri Cole, the president and CEO of the Greater Albuquerque Chamber of Commerce, said. “When people say this will only delay these bills so therefore they don’t matter as much, that’s just not true. For business, predictability means a great deal.”
Those who supported the delay said that businesses, like other areas of the state, should be part of the tough decisions needed to balance the budget.
“We’re willing to cut $100 million from them,” AFT-NM President Stephanie Ly said of school districts. “But our business community is not willing to put in anything.”
McCamley argued that other areas that need predictability will see cuts, mentioning domestic violence shelters and police departments.
“Predictability is important for everybody,” he said.
Committee will look at omnibus bill late
The committee rolled over the Senate’s omnibus tax bill, largely because of a big amendment by Ways and Means chair Harper. The amendment would have removed many key provisions of the bill itself.
McCamley said he preferred to be able to vote on large changes like this in the context of the larger package on how to fix the budget deficit.
Harper agreed to give the committee that possibility and agreed to “roll over” or skip the omnibus bill until leadership could get together to hash out a potential compromise.
House passed a budget bill
Earlier in the day while on the House floor, Rep. Dona Irwin, D-Deming, read a letter calling on the House to address the budget situation instead of crime bills.
“Let’s get on with the primary reason we’re here, the budget,” she said. “Then we can go home, knowing we’ve done the people’s business and we can be proud of what we’ve done.”
The full House immediately afterward passed its first bill related to the budget on a 66-1 vote. The bill would cut payments to the state retiree healthcare fund as well as stopping increases in funding for the fire protection grant fund.
McCamley, again, was the voice on behalf of the bill in the House, and admitted it was a hard choice.
“It should be very important for us to realize that these cuts are not belt-tightening,” McCamley said. “These cuts are not being more efficient.”
Instead, he said they would have real impacts; the retiree healthcare fund would be solvent only through 2032, instead of 2035, because of the bill. He also said firefighters throughout the state wouldn’t get the same equipment this year as they would the next year.
Speaker of the House Don Tripp, R-Socorro, addressed Irwin later.
“Representative Irwin, we have a budget bill that’s passed the House,” he declared.