Law­mak­ers at odds over cru­cial bills

Se­nate panel scales back House tax pack­age

Albuquerque Journal - - FRONT PAGE - BY DAN BOYD JOUR­NAL CAPI­TOL BUREAU

SANTA FE — A House­ap­proved plan to gen­er­ate more state rev­enue through a se­ries of new taxes and cre­at­ing new per­sonal in­come tax brack­ets for higher-earn­ing New Mex­i­cans was scaled back Thurs­day by a Se­nate com­mit­tee.

The vote left the tax pack­age in limbo with just two days left in this year’s 60-day leg­isla­tive ses­sion, as back­ers sug­gested they would re­sist the changes

to the leg­is­la­tion.

They also said the tax mea­sure, House Bill 6, is nec­es­sary to en­sure the state has a sta­ble rev­enue base to help pay for a pro­posed spend­ing in­crease on New Mex­ico teacher salaries and other ed­u­ca­tion ini­tia­tives.

“I’m not just try­ing to tax

for the sake of tax­ing,” Rep. Jim Tru­jillo, D-Santa Fe, the bill’s spon­sor, said dur­ing a meet­ing Thurs­day of the Se­nate Cor­po­ra­tions and Trans­porta­tion Com­mis­sion.

But crit­ics of the bill have ques­tioned the wis­dom of rais­ing taxes while the state has an un­prece­dented $1.2 bil­lion bud­get sur­plus — mostly from an oil drilling boom in south­east­ern New Mex­ico.

“How we raise more rev­enue for the state (is by) rais­ing the econ­omy of the state,” Sen. Wil­liam Sharer, R-Farm­ing­ton, said dur­ing a pre­vi­ous com­mit­tee hear­ing on the bill.

In its re­vised form, the tax pack­age would still in­crease some tax rates — specif­i­cally on cig­a­rettes and mo­tor ve­hi­cle pur­chases — while also broad­en­ing tax breaks for fam­i­lies.

It would also al­low the state and lo­cal gov­ern­ments to start levy­ing a tax on on­line sales — a 2018 U.S. Supreme Court rul­ing al­lowed states to do so — and would re­quire non­profit hos­pi­tals to pay the same gross re­ceipts tax rate that other hos­pi­tals do.

But the Se­nate com­mit­tee spiked a pro­vi­sion that called for cre­ation of new

per­sonal in­come tax brack­ets for in­di­vid­u­als mak­ing more than $23,5000 an­nu­ally. New Mex­ico’s top bracket would jump to 6.5 per­cent from 4.9 per­cent un­der the pro­vi­sion, es­sen­tially un­do­ing a 2003 in­come tax cut signed into law by thenGov. Bill Richard­son.

In ad­di­tion, the Se­nate Cor­po­ra­tions and Trans­porta­tion Com­mit­tee re­duced in size both the pro­posed tax rate on mo­tor ve­hi­cle pur­chases — from 4.2 per­cent to 3.5 per­cent — and the pro­posed ex­pan­sion of the work­ing fam­i­lies tax credit from the House­ap­proved ver­sion.

Those changes mean the tax bill would gen­er­ate roughly $93 mil­lion a year — down from more than $300 mil­lion an­nu­ally as ini­tially writ­ten. But econ­o­mists cau­tioned that pro­jec­tion could be al­tered af­ter fur­ther study.

Cabi­net sec­re­taries in Gov. Michelle Lu­jan Gr­isham’s ad­min­is­tra­tion have tes­ti­fied in sup­port of the orig­i­nal House bill, and two high-rank­ing Gov­er­nor’s Of­fice staffers at­tended Thurs­day’s hear­ing.

But the Se­nate panel forged ahead with its changes, which were crafted by the com­mit­tee’s chair­man, Demo­cratic Sen. Cle­mente Sanchez of Grants.

Af­ter be­ing ap­proved 5-2, the down­sized tax pack­age now ad­vances to an­other Se­nate com­mit­tee and, if ap­proved there, will go to the full Se­nate.

If the Se­nate ap­proves the re­vised ver­sion, it will be up to the House to de­cide whether to ac­cept it or re­ject it.

If it’s re­jected, that could lead to a con­fer­ence com­mit­tee, in which rep­re­sen­ta­tives from both cham­bers would try to reach a com­pro­mise.

Back­ers of the ini­tial bill sug­gested the Se­nate’s changes go too far.

“If we don’t raise a lit­tle bit of rev­enue … we won’t be able to honor our word for teach­ers,” Tru­jillo told re­porters af­ter Thurs­day’s hear­ing.

Mean­while, House Speaker Brian Egolf, D-Santa Fe, said one part of a po­ten­tial deal could be lim­it­ing per­sonal in­come tax in­creases to af­fect only New Mex­ico res­i­dents who earn $250,000 or more per year.

ED­DIE MOORE/JOUR­NAL

Sen. Cle­mente Sanchez, D-Grants, talks dur­ing a meet­ing of the Se­nate Cor­po­ra­tions and Trans­porta­tion Com­mit­tee on Thurs­day dur­ing which he amended House Bill 6, tax-over­haul pro­posal.

Rep. Jim Tru­jillo, D-Santa Fe, lis­tens as mem­bers of the Se­nate Cor­po­ra­tions and Trans­porta­tion Com­mit­tee amend his bill to change sev­eral tax rates.

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