The Revenue Stabilization and Tax Policy Committee held its first meeting of the 2023 interim on Thursday at the state capitol in Santa Fe. (Photo by Austin Fisher / Source NM)
There were four provisions in the tax package which the governor signed into law, according to the LFC
- A doubling of the child tax credit at lowest income levels.
- A one-time income tax rebate of $500 per person and $1,000 for couples, which should be hitting mailboxes in June.
- A health care practitioner sales tax reduction for copays and deductibles.
- A film tax credit expansion.
New Mexico’s governor vetoed most of the tax reforms passed by state lawmakers last session, and now a panel in charge of tax policy wants to bring them back in 2024.
Senate Majority Floor Leader Peter Wirth (D-Santa Fe) said Thursday some legislators are frustrated with the partial vetoes of the tax package by Gov. Michelle Lujan Grisham, but it gives them a roadmap for the next session.
“The work we did in laying this out are pieces that can be put into a new tax package,” Wirth said at the first interim meeting of the Revenue Stabilization and Tax Policy Committee on Thursday at the state capitol in Santa Fe.
In her April 7 veto message, Lujan Grisham wrote she had “grave concerns about the sustainability” of the tax package, and that it would “impact our ability to fund important services and programs that our citizens depend on, such as education, health care, public safety, and infrastructure.”
Prior to the governor’s vetoes, the tax package would have decreased the state’s annual revenue by more than $1.1 billion, according to the Legislative Finance Committee’s presentation on Thursday. Legislative Finance Committee Economist Jennifer Faubion said the governor’s vetoes cut that reduction in revenue to $235 million.
The leftover money now sits in the state government’s reserves, said Charles Sallee, interim director of the Legislative Finance Committee. Those state reserves total $3.7 billion, according to the presentation Thursday.
Some parts of the 2023 tax package that were not signed into law
- One-time income tax rebates totaling $687 million
- Sales tax cuts totaling $500 million in 2027
- Moving $174 million in motor vehicle excise taxes to road funds
- An income tax rate and bracket restructure costing $150 million
- An expansion of the child tax credit and low-income comprehensive tax rebate costing $128 million
“So you’ll have that in new money going forward, and the money piling up in treasury” could be used for one-time expenses, too, Sallee said.
Wirth said the tax committee during this interim should put together an “omnibus package” to consider during the upcoming 30-day session in 2024, “so we don’t start from scratch.”
He said the governor and the New Mexico Department of Finance and Administration need to tell lawmakers “where the administration is going, so we can work with that number and use pieces here to put together a package that works within that number.”
“We’ve got to get LFC and the governor and DFA on the same page when it comes to the size of the package,” he said. “That’s why we ended up with this veto.”
Rep. Derrick Lente (D-Sandia Pueblo), chair of the House Taxation and Revenue Committee, said the vetoes were “a learning experience for many of us” but are now in the rearview mirror.
Lente said he wants to negotiate with the executive branch on another tax package, “but not being led by the executive themselves, knowing we are a separate but equal branch of government.”
“We are the ones that are closest to our communities, we are the ones that are voices for our communities,” Lente said.
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