After vetoes, lawmakers want to bring back hundreds of millions in tax cuts

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.

“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.