February 3, 2017

Local-option fuel tax gains bipartisan support in House

Mike Mozart


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. Randall Crowder, R- Clovis, and Robert “Bobby ” Gonzales, D- Ranchos de Taos, the measure would limit any tax increase to 5 cents a gallon.

Crowder said other House Republicans support the bill, which gained the votes Friday of Rep. Larry R. Scott, R-Hobbs, and James R.J. Stickler, R- Farmington. Crowder said he has had discussions with Gov. Susana Martinez, who has publicly pledged not to increase taxes during her time in office. Crowder said her staff was interested but did not commit to support the bill.

Current law allows a 2-cent local option tax on just gasoline, but no local governments have moved forward with that, in part because of collection costs. The 5-cent option that also would apply to diesel fuel would be more appealing to local governments, especially in communities where there is a lot of truck traffic.

Crowder said those communities are increasingly pressed to pay for road projects from gross receipts taxes, the primary source of local tax revenue.

“We need all the options not to use (gross receipts tax) all the time,” said William Fulginiti, executive director of the New Mexico Municipal League.

Crowder said state budget headaches have affected local governments as the state reduces the local share of gross receipt tax revenue by scaling back so-called “hold harmless” reimbursements, which were promised to cities and counties when the state exempted food and medicine from the gross receipts tax.

“It increases the pressure on those communities,” Crowder said. “They have no revenue stream to do the maintenance on the state roads that run through their communities.”

Gonzales said his transportation committee hears from local officials who are struggling with basic maintenance issues. “At the local level, how do you best help yourself?”asked Gonzales.

A one penny increase statewide in the tax would raise $9 million from gasoline and $5 million from diesel.

Frank Crociata, director of tax policy for the Taxation and Revenue Department, said the local-option tax might be appealing to larger communities that already have a mechanism to collect assessments, but tax collection requires auditing and a collection policy, as well an an administrative appeals process.

“The cost of doing this will prevent a lot of smaller communities from assessing,” he said.

Still, the tax hike could not be implemented without approval from voters. The bill would prohibit overlapping options — so if a city imposed the tax then the county could only do so in its unincorporated area.

The public vote might prove more of an obstacle than getting authorization from the Legislature. A recent survey of voter preferences in New Mexico by Research and Polling indicated 58 percent oppose raising the gas tax, with 42 percent in strong opposition.

An effort by get a local gas tax on the ballot in Santa Fe failed to gain traction with a majority of the Santa Fe City Council last year.

New Mexico’s 17-cent gasoline tax remains lower than that of surrounding states and has not been increased in 25 years.

The bill, which has also passed the House Local Government Committee, now heads to the House floor.

Contact Bruce Krasnow at 986-3034 or brucek@sfnewexican.com.