By Daniel J. Chacón, The Santa Fe New Mexican
After rushing to develop a massive tax package last year that was then largely gutted by Gov. Michelle Lujan Grisham, lawmakers from both chambers of the Legislature met Friday to get an early start and avert a hasty repeat.
“We’re super excited to host this type of forum and meeting of minds to hopefully avoid what happened last year,” Rep. Derrick Lente, a Sandia Pueblo Democrat who chairs the tax committee in the House, said at the beginning of a joint meeting with members of the Senate tax committee.
“It’s anticipated that if we can come together, share ideas, share what perhaps ranked best within our respective committees, then we can move forward in a way where … we can be timely and efficient,” he said.
Sen. Carrie Hamblen, D-Las Cruces, vice chair of the Senate tax committee, said “a couple of conversations” have already taken place to “make sure this goes as smoothly as possible with our respective committees.”
The goal, she said, is to get a tax package to the governor “before the end of the session” in less than two weeks “and before chaos really starts setting in.”
The separate proposals from the House and the Senate include mostly items that were part of last year’s omnibus tax bill, including personal income tax bracket adjustments, the largest component of the House’s proposal.
While the proposed rate decreases target lower- and middle- income earners, “this will decrease taxes for all taxpayers,” Jennifer Faubion, an economist with the Legislative Finance Committee, told lawmakers.
New this year is a fire recovery tax credit to help residents rebuild after the devastating Hermits Peak/Calf Canyon Fire in 2022, the largest wildfire in state history.
“This creates an income tax credit to compensate for the construction of homes destroyed by the” wildfire, Faubion said, adding it’s capped at $5 million a year. “It’s a nonrefundable tax credit, one for one, for the cost of rebuilding a home.”
The proposal calls for providing property owners whose homes were destroyed by the wildfire a personal or any other form of income tax credit equal to the cost of constructing a home, minus any federal recovery.
It has sparked concerns from the Legislative Finance Committee.
A fiscal impact report on the proposed Home Fire Recovery Tax Credit, known as House Bill 10, states the bill would create a tax expenditure with a cost that is difficult to determine but likely significant.
“LFC has serious concerns about the substantial risk to state revenues from tax expenditures and the increase in revenue volatility from erosion of the revenue base,” the report states. “The committee recommends the bill adhere to the LFC tax expenditure policy principles for vetting, targeting, and reporting or action be postponed until the implications can be more fully studied.”
In an interview after the joint meeting, Lente said lawmakers are trying to create a transparent process “so there are no backroom deals … led by other people with influences.”
“We’re trying to do it in a way where we’re just trying to help out” New Mexicans, he said, adding the proposed income tax bracket adjustments, which he is spearheading, will benefit all taxpayers.
Other proposals include making an additional 5,000 health care practitioners eligible for the Rural Health Care Practitioner Tax Credit as part of an effort to recruit more providers to rural, underserved areas in New Mexico; a gross receipts tax deduction for for-profit child care providers on contract or receiving grant funds from the Early Childhood and Education Care Department; and increasing the special needs adopted child tax credit from $1,000 to $1,500.
All of those proposals were part of last year’s tax package, which remains a sore subject among some lawmakers.
Lujan Grisham stripped most of the provisions of that package, which would’ve ended up costing the state more than $1.1 billion annually in lost revenue if signed into law.
Rep. Jason Harper, R-Rio Rancho, expressed “a little disappointment” in what happened last year.
“I think we had a really good package last year; it really could’ve done some great things,” he said. “This will also be a great package, but there’s not a word in English for this feeling. There’s a German word called ‘weltschmerz,’ which is sadness for the world as it could’ve been.”