Ruling means state may owe millions in tax refunds to cannabis producers

The state of New Mexico’s Taxation and Revenue Department could be on the hook for millions of dollars in tax refunds to medical cannabis producers after a state Court of Appeals ruling made earlier this week. 

In her opinion filed on Tuesday, Court of Appeals Judge Monica Zamora wrote that medical cannabis producers should be able deduct gross receipts taxes just as pharmacies do for sales of prescription drugs. Under the Lynn and Erin Compassionate Use Act, the state’s medical cannabis law, medical cannabis is not prescribed to patients. Instead, qualified medical professionals issue a recommendation to the state Department of Health for each patient. 

Zamora cited the federal Food, Drug and Cosmetics Act, which says that restricted drugs “shall be dispensed only . . .

Amazon to begin charging tax on New Mexico-bound purchases

New Mexicans shopping on Amazon.com will soon find a state tax added to their bill. State officials said Monday the giant online retailer will begin collecting gross receipts taxes on purchases shipped to the Land of Enchantment beginning in April, a move that may not thrill shoppers but will likely hearten legislators looking to boost revenue amid a budget crisis and please small businesses frustrated with competing against internet companies that do not charge New Mexico taxes. “It will give much needed revenue to the state and it will allow local retailers to compete fairly,” said Simon Brackley, president of the Santa Fe Chamber of Commerce. The announcement that Amazon would start collecting New Mexico taxes comes as the state Legislature is considering legislation that would require major internet companies to charge gross receipts taxes on purchases shipped into the state. Amazon is expected to pay the base state gross receipts tax of about 5 percent.

Automatic voter registration bill dies in committee

Two Democrats joined with Republicans to kill a bill that would have automatically registered all eligible adults as voters when they obtain a New Mexico driver’s license. Rep. Debbie Rodella, D-Española, questioned whether the bill was necessary when the Motor Vehicle Division can already offer eligible adults the chance to register to vote. Republicans on Thursday evening moved to table the bill in the House Local Government, Elections, Land Grants and Cultural Affairs Committee. Rodella and a newly elected Democrat, Rep. Daymon Ely of Corrales, sided with Republicans to stop the proposal on a 5-2 vote. Update: Later in the week the the committee heard the bill again and, after amending it, passed it.

Local-option fuel tax gains bipartisan support in House

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.

Beyond the food tax: Legislators aim for an overhaul of the system

Media coverage of planned tax legislation has so far focused on one hot-button topic of the proposal—reinstating a state tax on food. Santa Fe Archbishop John C. Wester and advocacy groups like New Mexico Voices for Children have vocally opposed the idea. But the two state representatives behind the proposal have not actually filed any legislation on the matter for the session that begins in January. Legislators could begin introducing bills on Dec. 15.

Acting TRD head talks about Padilla resignation

The highest-ranking official at the state Taxation and Revenue Department became somewhat reflective Tuesday over last week’s sudden resignation of his former boss, Demesia Padilla. At an annual state legislative conference hosted by the New Mexico Tax Research Institute, the department’s Deputy Secretary John Monforte said he’s known Padilla for 10 years and came to the department when she was appointed by Gov. Susana Martinez. Padilla resigned as secretary last week after an agent for Attorney General Hector Balderas filed a search warrant affidavit on her home. Monforte is now heading the department. The affidavit described an ongoing investigation that points to possible tax evasion and alleged embezzlement of money from a business she once did accounting work for, including while she was TRD secretary.

Our coverage of Demesia Padilla’s alleged abuse of power

Part of the search warrant that resulted in the resignation of Taxation and Revenue Department Secretary Demesia Padilla mentioned her alleged abuse of power in a case referred by the State Auditor. Here are the stories NM Political Report wrote about this from last year. Auditor finds possible abuse of power in Tax and Rev: Allegations revealed by the state Auditor found that (at the time) unnamed top officials in TRD could have given improper preferential treatment to a taxpayer in New Mexico. State Auditor Tim Keller referred the investigation to Attorney General Hector Balderas. A spokesman for TRD said the letter from Keller was political and, “We believe these are nothing more than unsubstantiated claims that are being driven by disgruntled former employees, who either work for the State Auditor or were fired for sexual harassment, and now they have an ax to grind.”
TRD secretary named in investigation: A letter to Gov. Susana Martinez from State Auditor Tim Keller revealed the allegations of abuse of power surrounded Taxation and Revenue Department Secretary Demesia Padilla.

Projections show decline in state revenue

During September’s special legislative session, lawmakers agreed on fixes that added about $23 million in revenue. That was a start, but not nearly enough to solve the state’s budget crisis. On Wednesday, state legislators received little good news about the state’s revenue stream during a committee meeting. Even with that help, New Mexico’s bean counters dropped their revenue projections for the current fiscal year from previous estimates by more than $130 million. The state’s current fiscal year began in July and ends next June.

State budget deficit at $69 million this year, could be higher next year

The latest update on the state’s budget situation was filled with negative news, including a large reduction from previous budget projections released in August. The current year’s budget is projected to be $69 million in the hole. For the fiscal year starting July 1, 2017, state budget experts project $300 million less money to spend than the budget in the current fiscal year—which itself saw massive cuts during the special session, with 5.5 percent cuts to most agencies. The update, presented by experts from the Department of Finance and Administration and the Taxation and Revenue Department Monday morning to the Legislative Finance Council, comes a month and a half before legislators go back to work during a regular legislative session to deal with next year’s state budget. During a special session in September and October, the Legislature plugged a $600 million budget deficit that encompassed last year’s budget and the current budget through a combination of tapping into reserves and making cuts.

House Majority Leader gave staffer big contracts after the session ended

New Mexico lawmakers haven’t been in session for nearly seven months, but that didn’t stop the Majority Leader of the state House of Representatives from awarding more than $100,000 in contracts to his top staffer. But Rep. Nate Gentry, R-Albuquerque, defended the contracts of his de-facto chief of staff Ryan Gleason as “well worth the expenditure.”

Gentry snagged Gleason—an attorney who previously was a legislative assistant Sen. Pete Domenici, the New Mexico state director for the U.S. Department of Agriculture and a research director for the state Taxation and Revenue Department—from state Speaker of the House Don Tripp, R-Socorro. Gleason worked as Tripp’s full-time chief of staff from January 2015 through the end of this year’s general legislative session in February. Gentry’s position of majority leader is directly under Tripp in state House Republican leadership. Gleason’s switch from working for Tripp to working for Gentry reflects how the bulk of policy decisions in the House Republican leadership start with Gentry.