Late Wednesday night the New Mexico Senate approved an overhaul of the state’s tax structure. However, its substitute of HB 547 included several changes made by the Senate Tax, Business and Revenue Committee that may be a hard sell back in the House.
Most of the tax plan remains the same. It includes tax rebates of $500 and $1000 for New Mexican tax filers. The highest personal income tax rate will remain at 5.9-percent.
It lowers the Gross Receipts Tax from five-percent to four-percent until July of 2024 and then down to 4.375% after that. It increases corporate tax deductions and increases the child income tax credit up to $600.
But one of the Senate’s changes is in liquor taxes which would double under the bill. The amendment brings back the proposed 25-cents per serving tax on alcoholic beverages, including in package stores. That bill was tabled in committee this month.
In the House version all of the liquor tax would go to alcohol secession programs, under the Senate version, $45 million would go to the general fund. The rest would go to succession programs. With the per serving and other liquor taxes, there would be more dollars for such programs than in the original bill. But the 25-cents per serving tax was sharply debated in the legislature with opponents saying it would greatly harm small businesses that sell alcohol.
House Taxation and Revenue Committee Chair Derrick Lente says he’s not sure how his committee members are going to react to some of the Senate’s late hour changes.
“There were some things that we knew were coming and some things that just caught us out of left field so at this point, I move as a team. I’m only one member of that team. While I’m the voice and the chairperson of that team I want to make sure it’s an inclusive process,” he said. “The same reason I was so proud how it went out of this committee and out of this chamber as a bipartisan product, I want to maintain that commonality that we worked as a team.”
Just before midnight the Senate version passed on a 24-12 vote.
Republican amendments to eliminate the capital gains tax, and remove the sunset on the military retirement pay taxes exemption were rejected.
The tax bill now heads back to the House for a concurrency vote. The legislative session ends at noon on Saturday.
UPDATE - The Governor's office released this statement Thursday morning.
Gov. Michelle Lujan Grisham on Thursday urged the Legislature to re-evaluate the magnitude of the omnibus tax bill now being considered. Following significant changes made on the House floor, House Bill 547 would reduce General Fund recurring revenues by about $1 billion, over a tenth of the state budget.
“Most New Mexicans have stinging memories of past years of painful funding cuts spurred by an imbalanced recurring budget. While this administration has done incredible work
to diversify our economy and our revenue streams to protect ourselves from the busts of the oil industry, make no mistake that our state budget remains subject to unprecedented volatility with a high reliance on energy revenues. Today, I’m worried that the Legislature may have a short-term memory. The current tax package proposed in House Bill 547 would reduce the state’s recurring revenue by a billion dollars every single year – that's a full tenth of the entire state budget. That’s on top of the $500 million in broad-based, recurring tax relief that we’ve worked with the Legislature to implement over the last four years.
Put simply: this tax package cuts too deep, too quickly.
I’m with the Legislature: let’s deliver bold, meaningful
tax reform – but let’s also protect our future by making responsible choices today. Otherwise, public safety, education, and the other critical priorities we all share may end up on the chopping block.”