Gov. Michelle Lujan Grisham signed an expansive tax bill but she line-item vetoed most of the bill.

HB 547 includes one-time tax rebates, increasing the child tax credit and expanding the health practitioners’ gross receipts tax deduction. She cited fiscal responsibility as a reason to line-item veto much of the bill.

“Although HB 547 has many laudable tax reform measures, I have grave concerns about the sustainability of this tax package as a whole,” Lujan Grisham said in her veto message. “HB 547’s tax cuts will impact our ability to fund important services and programs that our citizens depend on, such as education, healthcare, public safety, and infrastructure. This decrease in revenue will have a disproportionate impact on certain populations in our State—particularly those who are already struggling to make ends meet. Given the unpredictable nature of the economy and our State’s reliance on oil and gas revenues, I am not confident this package is fiscally responsible.”

The line-item vetoes include sections of the bill that would have added tax credits for electric vehicles, energy storage systems and geothermal electricity efforts.

“I appreciate the Legislature’s willingness to consider such sweeping tax reform,” Lujan Grisham said in the executive message. “But as Governor, it is my duty to prioritize the needs of all New Mexicans, and I believe that we must take a more thoughtful and deliberate approach to tax reform. I urge the Legislature to work with my Administration to develop a comprehensive tax plan that is sustainable and in the best interests of New Mexicans.”

Environmental advocates decried the line-item vetoes of five tax credits related to clean energy, as well as the governor’s veto of a bill that would have established a geothermal center and fund. 

“The five credits for electric vehicles, energy storage, and geothermal development would have made some progress in preventing climate disaster, as would the geothermal center of excellence and fund, which could also be a significant economic-development tool for New Mexico,” the Rio Grande Chapter of the Sierra Club said in a statement. “We are facing a climate emergency that requires emergency action, not vetoes.”

Although most of the tax bill was line-item vetoed, some parts were kept intact including the one-time $500 tax rebates.

“I am not vetoing the portions of HB 547 that give New Mexicans one-time tax rebates, increase the child income tax credit, increase the benefits of the film tax credit, and expand the health practitioners gross receipts tax deduction,” Lujan Grisham said in her executive message. “These measures align with my commitment to support working families, the healthcare system, and our economy. I believe that these portions of the bill are necessary and beneficial, and I am pleased to support them.”