Rebates drop as tax ideas combined into package

House omnibus legislation would give single filers $300 and married couples $600, down from governor’s request

Lawmakers on Monday unveiled an omnibus tax policy bill that offers a number of credits and relief for most taxpayers across the state. But it falls short of Gov. Michelle Lujan Grisham’s desired total for rebate checks to state residents battling inflation and the after-effects of COVID-19.

Those hoping for rebates in the $750 to $1,500 range — the figures Lujan Grisham cited in her State of the State address — could see somewhat lighter checks if the nearly 70-page piece of legislation, which its proponents say cobbled together key policy initiatives while trying to keep the rebates in play, is approved.

Based on House Bill 547, taxpayers filing individual returns can expect $300, while married couples can expect $600.

The reduction in personal tax rebate checks was part of an effort to avoid depleting all of a roughly $1 billion tax-policy package fund, said Rep. Derrick Lente, D-Sandia Pueblo, who chairs the House Taxation and Revenue Committee.

“If we had followed that rationale, that would have completely extinguished our ability to do anything tax-wise for the state,” he said in a news conference after the committee voted 9-5 to approve the bill Monday.

“We scaled that back to the $300 per single filer, $600 per married couple filer, which brought our total cost to about a little under $500 million, which will then allow us to do these other creative tax structure policy changes,” Lente added.

He said the governor is not on board with the cut in rebates.

“She’s not OK with that,” he said. “There was discussion that their sweet spot, I believe, was going to be at $500 per single and $1,000 for married couple. That being said, we are a couple hundred dollars away from that goal.

“But nonetheless, we think that the initiatives as we target rural health care, as we target other initiatives in this tax package, far outweigh those one-time payments.”

But Lujan Grisham is not giving up, said her spokeswoman, Maddy Hayden.

“The governor has made it clear to leadership that hard-working New Mexico families deserve more than $300,” Hayden wrote in an email. “She will continue to fight to get more dollars in the pockets of New Mexicans and fully expects the Legislature to boost that number up to at least $500 for single filers.”

The five Republicans on the committee voted against House Bill 547. Though several Republicans said the bill includes positive elements, they also said it does not specifically help small businesses or address job growth initiatives that are necessary to help businesses still reeling from the coronavirus pandemic.

“What we are doing is helpful to [New Mexicans], but it’s putting a Band-Aid on the issue,” said Rep. Jim Townsend, R-Artesia.

Democrats on the committee defended the tax package, contending it will help New Mexicans across the state by offering tax exemptions for lower- and middle-class earners and child income tax credits for eligible taxpayers while also dropping the state’s gross receipts tax by .5%.

“It’s a small number, but it’s a lot of money,” House Speaker Javier Martínez, D-Albuquerque, said of the GRT decrease. “I think this is very good for business.”

On the other hand, those who fall in the highest taxable income bracket — married couples filing jointly who are earning $500,000 or more — will see an increase from 5.9% to 6.9% in tax payouts.

Lente said the process of putting together HB 547 included combining some of the best elements of roughly 50 tax policy bills that came into play during this year’s 60-day legislative session.

He said all committee members, as well as Legislative

Finance Committee analysts, played a role in shaping the bill.

Martínez said during the committee hearing lawmakers had to bring various tax policy bills together into one package. Otherwise, he said “it’s almost impossible to keep track of how it impacts the capacity of House Bill 2,” the state operating budget legislation.

He said nothing in HB 547 has “not been fully vetted, fully cooked, fully baked, fully fried” by financial analysts. Among the bill’s highlights:

◆ Rebate checks of $300 for individual taxpayers and $600 for married couples.

◆ A low-income tax policy component that offers a series of tax rebate exemptions for individuals, those over 65, blind residents and children.

◆ A rural health care practitioner credit for up to $5,000 for physicians, dentists, podiatrists and other medical professionals and up to $3,000 for pharmacists, dental hygienists, nurses and midwives and other medical professions.

◆ A child income tax credit, depending on the gross income of the taxpayer, of up to $600 per child.

◆ A refundable electric vehicle income tax credit of $2,500 for every electric vehicle purchase or $4,000 for households under 200% of the federal poverty level.

Amber Wallin, executive director of the Albuquerque-based advocacy nonprofit New Mexico Voices for Children, wrote in an email after the vote the bill “is a big win for the whole state. It is really smart tax policy that will improve economic opportunity and equity for New Mexico families, workers, and communities with improvements to the Child Tax Credit, personal income taxes, and a rebate for low-income earners.”

She called the GRT cut “significant” and said it is one that will “benefit all residents and businesses in the state.”

Others were not so complimentary.

During the hearing, some representatives of alcohol companies said a proposed 15 cents per gallon or liter of beer, wine and spirits excise tax will increase the cost of their product significantly — as much as 37% in taxes for beer alone, said Jimmy Bates of Premier Brewing Company.

More than half the money from the increased alcohol excise tax would go into a new alcohol harm reduction fund, Lente said.

Based on state Department of Health statistics, 2,273 New Mexicans died from alcohol-related causes in 2021, and lawmakers have vowed to do something to address the effects of alcohol on the state.

Lente said HB 547 next goes to the House of Representatives for consideration, perhaps as early as Wednesday. Assuming it clears the House floor, it would then go to the Senate.