Legislators: Federal tax plan could devastate NM
GOP proposal could cost state $440 million in mineral lease revenue
SANTA FE — Democratic legislative leaders say New Mexico could lose hundreds of millions of dollars in annual revenue if Congress overhauls the U.S. tax code as proposed — enough to wipe out reserves and damage the state budget.
State Rep. Patricia Lundstrom, D-Gallup, chairwoman of the influential Legislative Finance Committee, and Sen. John Arthur Smith, D-Deming, vice chairman, asked the state’s congressional delegation Tuesday to relay their concerns on Capitol Hill.
They say passage of federal legislation reshaping the U.S. tax system could trigger automatic cuts in federal spending, endangering about $440 million in revenue New Mexico receives from federal mineral leasing.
The automatic cuts can be avoided if Congress passes separate legislation — under rules that would require bipartisan support in the Senate — lifting the required spending reductions, but that’s no sure thing.
In any case, losing that much revenue “would have a devastating impact on the state’s budget and would wipe out the reserves our state has struggled to rebuild,” Lundstrom and Smith said in a letter to the congressional delegation.
New Mexico would also face spending cuts in Medicare — of about $180 million a year — as a result of the tax legislation, they added.
U.S. Rep. Steve Pearce, a Republican candidate for governor, said he has opposed a “sequester,” or automatic spending cuts, and will work to make sure the final version of the tax proposal is good for the state.
“I support tax reform to spark GDP growth and revive the nation’s economy, while reducing the tax rate for lower- and middleincome families and small businesses,” he said in a written statement. “I will continue to work with my colleagues to ensure that the final tax reform bill will be beneficial for New Mexico.”
U.S. Sen. Tom Udall, D-N.M., said the GOP proposal could also reduce farm payments and other funding.
“The bottom line is that this tax bill is a scam that would not only leave taxpayers with less money in their pockets,” he said in a written statement, “it would leave the state with fewer resources to meet their needs, and that’s a devastating combination.”
U.S. Sen. Martin Heinrich, D-N.M., said that “one of the fundamental problems with this bill is that Republicans cannot afford the tax cuts they want,” causing drastic reductions that would harm New Mexico and other states.
The automatic spending cuts are possible because of a federal law that requires Congress to offset legislation that adds to the federal deficit. The tax bill passed by the U.S. House would add about $1.5 trillion to the deficit over 10 years, according to the Congressional Budget Office.
The automatic cuts could be avoided if separate legislation is passed, but a proposal like that would require 60 votes of support in the Senate. A bill preventing spending cuts couldn’t be considered under the fasttrack process that applies to the tax proposal, which needs only a simple majority to pass.
New Mexico’s general operating budget totals about $6.1 billion a year. The state is just emerging from a fiscal crisis that damaged its credit rating and nearly depleted its reserves.