• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Mountain
    • Bike Park
    • Lift Tickets
    • Mountain Facts
    • Ski & Snowboard School
    • Snow Report
    • Trail Map
  • Winter
    • Ski Shops
    • Downhill Skiing
    • Ice Fishing
    • Night Skiing
    • Nordic Skiing
    • Sledding
    • Snowmobiling
    • Sleigh Rides
    • Terrain Parks
    • Tubing
  • Summer
    • Biking
    • Camping
    • Fishing
    • Go Carts
    • Golfing
    • Hiking
    • Horseback Riding
    • Music From Angel Fire
    • Whitewater Rafting
  • Lodging
    • Bed & Breakfasts
    • Cabins, Condos & Houses
    • Hotels, Motels & Lodges
    • Pet Lodging
    • R.V. Parks
    • Reservation Services
  • Real Estate
    • Builders & Supplies
    • For Sale By Owner
    • Home Builders
    • Office Space
    • Real Estate Sales
    • Real Estate Services
  • Links
  • Angel Fire News

Angel Fire, New Mexico

Lodging, Real Estate, Skiing, Golf & More!

  • About Angel Fire
    • Advertising
    • Area Groups
    • Attorneys
    • Churches
    • Communication
    • CPAs
    • Dining
    • Essentials
    • Financial Services
    • Getting Here
    • Home Services
    • Insurance
    • Internet Services
    • Jobs
    • Living Here
    • Local Businesses
    • Music From Angel Fire
    • Photography
    • Schools
    • Security
    • Shopping
    • Vital Statistics
    • Weather
  • Event Schedule
  • Request Brochure
  • Email This Page
  • Photo Gallery
  • Video Gallery
  • Contact Us

Legislation Updates

February 25, 2017 By Dave C. Leave a Comment

Friday, February 17, 2017
53rd Legislature, First Session
Day 31

This session has reached the halfway mark and the deadline for bill introduction has passed. On Feb. 15 the count stood at 1132 bills; 568 in the House and 564 in the Senate.

There is still a lot of work to be done this session, most importantly is the development and implementation of a budget. As expected, there is no change in the revenue forecast. The expectation is that revenue falls $103 million short of current state spending, $5.9 billion. This coupled with the need to rebuild reserves call for something in the neighbor hood of $200 million in new revenue, budget cuts or budget magic (“sweeping funds, etc.). While the outlook for oil prices is a bit more favorable, the outlook for employment growth is somewhat less, so it balances to put us just where we were back in December when the last forecast was made.

As budget writers contemplate how to balance the budget, but also to build back cash reserves both to protect the state’s credit rating and to deal with unforeseen circumstances, there are two schools of thought to accomplish the goal of raising approximately an another $200 million: (1). Raise taxes, or; (2) Cut spending. Democrats, who have sizable majorities in both houses tend towards number one, “The cuts that we have imposed during the 2017 budget year have been devastating,” said Senate Majority Leader Peter Wirth in a recent interview with the Santa Fe New Mexican. Wirth and other Democratic leaders are making it clear that they’re done with cutting government services.

As of Monday, the Governor’s stance on tax increases has not changed. Spokesperson Chris Sanchez said, “The Governor stands by her promise: she will not raise taxes. She does, however, support closing tax loopholes and modernizing the tax code.” There you have the opening gambits – the lines have been drawn in the sand. But, sand shifts and lines fade. If a budget deal is going to be reached by the end of the session, something will have to give.

There are many moving parts here both for comprehensive tax reform and for solvency for FY17. Here are some things that are on the table:

1. Sweeping comprehensive tax reform: HB 412 sponsored by Representative Jason Harper (R-Sandoval) and Senator John Arthur Smith (D-Dona Ana, Hidalgo, Luna and Sierra) and Carlos Cisneros (D-Los Alamos, Rio Arriba, Santa Fe and Taos) revamps the Gross Receipts Tax system by eliminating nearly all the exemptions, lowering the GRT rate, and lots more (more details on this bill are listed below if you are interested) The bill rebrands the Gross Receipts Tax as a Retail Sales Tax. The bill also addresses both personal and corporate income tax by establishing a 5% flat rate and subjecting online retail sales to the RTS (viewed as closing a loophole).

The goal in setting the new sales tax rate is to be relatively revenue neutral. Of course, the underlying issue is whether this bill can get the support it needs to stay alive in the session and ultimately be signed by the Governor. Or, will it gain no traction in the Legislature in favor of “tax increase proposals” designed to deal with solvency for FY18 only and no comprehensive tax reform in this Legislature? Speaking of those “tax increase proposals…”

2. The House Democrats laid out their plan for a solvency bill. The package has four items:

  • Eliminating the exemption for paying GRT for nonprofit hospitals ($65M)
  • Increasing the vehicle excise tax 1% ($49M)
  • Raising permit fees on commercial trucks from $5.00 to $90.00 ($63M)
  • Removing the exemption for online retail sales ($20M).

This package adds up to about $200M and is expected to be introduced this week and will be amended into HB202, which is the current bill for online retail sales.

3. Budget Solvency: A Second Look: Representative Harper suggested during the FY 17 budget solvency debate, converting this year’s capital outlay funds to general fund use. This swap is good for around $60 million and is such an obvious move; we wonder why it doesn’t get more traction. Let’s face it, $60 in capital outlay spread out across all legislative districts is going to have zero impact on building a more diverse economy. In addition, excess funds in the legislative retirement system could get many millions of dollars. These two proposals are worth a second look. They are relatively painless and don’t hit public schools or other high priority programs.

4. Right sizing government: New Mexico is on the high side of spending per capita when compared to our Southwestern neighbors. There are opportunities to look at consolidating some agencies and otherwise looking at overhead and administration to see where savings can be made. It’s hard to estimate the savings but several millions wouldn’t be out of the question. Consider a 1% reduction of a $5.9 billion budget is around $60 million. To a businessperson, that seems very doable, as cutting 1% from operating costs is pretty much a no-brainer. This is not to suggest an across the board cut but rather a strong prioritization of programs based on their effectiveness. Add this $60 million to it and the goal could be met without any other tax increases. We continue to believe that raising taxes in a weak economic environment is counterproductive at this stage of the session and we must look to restructuring and finding greater efficiencies first.

As you can see, there are no easy answers. Policy makers are struggling to balance all the interests competing for budget dollars while trying to balance the budget and build back a reasonable reserve. There are wide philosophical differences and deeply held beliefs that are also in play. It may be difficult to reach consensus (code for a Special Session).

More on HB 412 sponsored by Representative Jason Harper (R-Sandoval), Senator John Arthur Smith (D- Dona Ana, Hidalgo, Luna and Sierra), and Senator Carlos Cisneros (D-Los Alamos, Rio Arriba, Santa Fe and Taos) will be heard in House Taxation and Revenue Committee tomorrow. The bill is almost 350 pages. Representative Harper prepared the following white paper, which provides an excellent summary of what the bill does. The vast majority of this bill, the Chamber can support, but there are some things that we are uncomfortable with but that’s usually the definition of a good bill.

2017 New Mexico Tax Reform Act
Background and Objective
Representative Jason Harper (R-Sandoval)

The purpose of this reform is to solve substantial problems in the New Mexico Gross Receipts Tax (GRT) structure. The NM GRT is routinely rated as one of the worst state consumption taxes in the nation by respected national tax policy groups [1]. These low ratings are attributed to: i) significant erosion of the base (great increase in the number of exemptions, deductions, credits), ii) taxation of every step of production (pyramiding), iii) significant increases in the tax rate from the original 2% (compounding the pyramiding problem), iv) complexity and challenges with compliance (e.g. Non-Taxable Taxation Certificate complexity), v) recent removal of consumption and other revenue that adjusts with inflation from the base, vi) unusual structure compared to nearly all other states (e.g. the term ‘GRT’ scares away businesses considering relocation to NM), and vii) lack of transparency.

The NM GRT is a hybrid of a true GRT and a true Retail Sales Tax (RST). An objective analysis of NM GRT concludes that this hybrid comprises the worst attributes of a true GRT, and the worst attributes of a RST [2].

The objective of this reform is to create a new hybrid that contains the best attributes of a true GRT, and the best attributes of a true RST. This will result in a new consumption tax structure that complements the modern economy, and is well equipped to handle future economic changes. This reform will also improve stability of revenues, restore uniformity and fairness of the tax, simplify administration and compliance, increase transparency, broaden the base, and lower all rates.

1. “Facts & Figures 2016: How Does Your State Compare,” Tax Foundation. NM Sales Tax ranked 48th in the State Business Climate Index; NM Sales Tax ranked the 7th highest sales tax collection per capita.

2. “Reforming the Gross Receipts” Helen Hecht, Tax Counsel, Federation of Tax Administrators and Richard Anklam, Executive Director, New Mexico Tax Research Institute. Presentation to the Revenue Stabilization and Tax Policy Committee, 2013.

Summary of Tax Code Changes Gross Receipts Tax (GRT)

  • Broadening the tax base by removing nearly all exemptions, deductions, and credits:
    • Significantly lowers state and local tax rates
    • Improves uniformity
    • Improves stability of revenue and restores revenue streams that grow with inflation
  • Removes the most egregious form of pyramiding (business-to-business professional services and inputs)
  • Simplifies compliance and improves administration by reducing number of Non-Taxable Transaction Certificates (NTTCs)
  • Increases fairness
    • Provides for alternative evidence in the case of a missing NTTC during audit
    • Levels the playing field for local brick and mortar businesses by taxing internet sales transactions
  • Removing the non-profit exemption to GRT:
    • Increases fairness and uniformity in the medical industry by treating non-profit and for-profit facilities the same
    • Guards against future Federal Laboratory structure changes
  • Improves transparency by correctly attributing the 1.225% municipal share of the state tax to the municipalities tax rate
  • Provides flexibility to local governments by converting all county and municipal earmarks to general purpose
  • Eliminates the need for Hold Harmless payments by re-imposing the sales tax on food and healthcare practitioners
  • Re-brands GRT as ‘Sales Tax’
  • Only three classes of exemptions, deductions and credits remain:
    • Anti-pyramiding – consolidated and rolled into a new anti-pyramiding section
    • Recent economic incentives that resulted in substantial investment in the state
    • NM does not need the reputation of ‘giving a good deal and then pulling out the rug’
    • Sunsets added to these remaining deductions and credits
    • Federal preemption doctrine: the state is not allowed to impose a tax because federal law prohibits it

Compensating Tax

  • Removes perverse incentive to purchase out of state by aligning with GRT (now sales tax) base, and requiring that the rate be the same as the sales tax rate (as opposed to lower which is currently the case)

Low-Income Comprehensive Tax Rebate (LICTR)

  • Guards against regressivity of the new sales tax by updating and realigning distributions to the federal poverty level and the new sales tax rate

Supplemental Nutrition Assistance Program (SNAP)

  • Guards against regressivity of the new sales tax by removing the sales tax on all food purchased by a qualified SNAP program recipient (including food purchased with non-SNAP dollars)

Liquor Excise Tax

  • Distributes Liquor Excise Tax revenue to state and county DWI treatment and prevention programs (60%), drug court programs (10%), and to the state as a match for Medicaid expenditures (30%)
    • When the Liquor Excise Tax was adopted, the liquor industry agreed to support it in exchange for the revenue being dedicated to specific programs but the state has been putting most of it in the General Fund; this makes good on the deal

Motor Vehicle Excise Tax (MVET)

  • Addresses significant statewide road infrastructure problems by sending 30% ($42 mil) of MVET to the state road fund, and 30% to the local road fund, as has been done in the past; the remaining 40% will continue to go to the General Fund

Personal Income Tax (PIT)

  • Provides for a single PIT bracket at 5%

Corporate Income Tax (CIT)

  • Provides for a single CIT bracket, and aligns the CIT bracket with the top state personal income tax bracket (5%)
    • This single 5% PIT and 5% CIT bracket structure is the same structure as used in Utah, which is consistently rated in the top 10 of state tax structures
  • Increases fairness and uniformity by requiring market-based sourcing for intangibles, not just tangibles

Property Tax – Tax Lightning

  • Removes the provision in state law that requires the assessed value of a property to immediately adjust to current and correct when a property changes ownership, resulting in significantly higher property tax (tax lightning)
  • Removes the annual cap on property valuation increases which will allow yield control to work effectively
  • Ensures low income families who have lived in a home for many years are not priced out of their home when values go up

Filed Under: Angel Fire News Tagged With: Government

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Primary Sidebar

Featured Business

Snowblaze Ski Shop
Snowblaze Ski Shop

Local Weather

ANGEL FIRE WEATHER

Snow Report

Check out the latest snow report or three mountain web cams from Angel Fire Resort.

Road Conditions

Check out road conditions in New Mexico. Stay safe!

Archives

  • March 2023 (13)
  • February 2023 (7)
  • January 2023 (9)
  • December 2022 (14)
  • November 2022 (4)
  • October 2022 (13)
  • September 2022 (8)
  • August 2022 (6)
  • July 2022 (8)
  • June 2022 (15)
  • April 2022 (5)
  • March 2022 (15)
  • February 2022 (10)
  • January 2022 (10)
  • December 2021 (4)
  • November 2021 (5)
  • October 2021 (17)
  • August 2021 (3)
  • July 2021 (12)
  • May 2021 (15)
  • April 2021 (12)
  • March 2021 (10)
  • February 2021 (10)
  • January 2021 (16)
  • December 2020 (5)
  • November 2020 (12)
  • October 2020 (23)
  • September 2020 (21)
  • August 2020 (8)
  • July 2020 (15)
  • June 2020 (18)
  • May 2020 (17)
  • April 2020 (25)
  • March 2020 (37)
  • February 2020 (12)
  • January 2020 (17)
  • December 2019 (4)
  • November 2019 (11)
  • August 2019 (5)
  • July 2019 (11)
  • June 2019 (12)
  • May 2019 (14)
  • April 2019 (19)
  • March 2019 (13)
  • February 2019 (33)
  • January 2019 (4)
  • December 2018 (6)
  • November 2018 (12)
  • October 2018 (14)
  • September 2018 (9)
  • August 2018 (1)
  • July 2018 (16)
  • June 2018 (3)
  • May 2018 (21)
  • April 2018 (20)
  • March 2018 (23)
  • February 2018 (18)
  • January 2018 (5)
  • December 2017 (54)
  • November 2017 (10)
  • October 2017 (20)
  • September 2017 (19)
  • August 2017 (18)
  • July 2017 (11)
  • June 2017 (12)
  • May 2017 (15)
  • April 2017 (28)
  • March 2017 (16)
  • February 2017 (30)
  • January 2017 (27)
  • December 2016 (12)
  • November 2016 (17)
  • October 2016 (17)
  • September 2016 (14)
  • August 2016 (18)
  • July 2016 (10)
  • June 2016 (22)
  • May 2016 (13)
  • April 2016 (19)
  • March 2016 (10)
  • February 2016 (18)
  • January 2016 (14)
  • December 2015 (29)
  • November 2015 (12)
  • October 2015 (13)
  • September 2015 (10)
  • August 2015 (17)
  • July 2015 (16)
  • June 2015 (14)
  • May 2015 (33)
  • April 2015 (15)
  • March 2015 (14)
  • February 2015 (20)
  • January 2015 (9)
  • December 2014 (34)
  • November 2014 (20)
  • October 2014 (20)
  • September 2014 (13)
  • August 2014 (29)
  • July 2014 (15)
  • June 2014 (24)
  • May 2014 (22)
  • April 2014 (15)
  • March 2014 (16)
  • February 2014 (10)
  • January 2014 (20)
  • December 2013 (20)
  • November 2013 (17)
  • October 2013 (22)
  • September 2013 (13)
  • August 2013 (14)
  • July 2013 (25)
  • June 2013 (25)
  • May 2013 (17)
  • April 2013 (12)
  • March 2013 (15)
  • February 2013 (11)
  • January 2013 (16)
  • December 2012 (17)
  • November 2012 (19)
  • October 2012 (17)
  • September 2012 (9)
  • August 2012 (15)
  • July 2012 (18)
  • June 2012 (18)
  • May 2012 (23)
  • April 2012 (13)
  • March 2012 (15)
  • February 2012 (11)
  • January 2012 (17)
  • December 2011 (15)
  • November 2011 (16)
  • October 2011 (17)
  • September 2011 (18)
  • August 2011 (22)
  • July 2011 (19)
  • June 2011 (18)
  • May 2011 (34)
  • April 2011 (45)
  • March 2011 (48)
  • February 2011 (55)
  • January 2011 (46)
  • December 2010 (39)
  • November 2010 (57)
  • October 2010 (30)

Tags

Adoption Angel Fire ArtSpace Angel Fire Chamber of Commerce Angel Fire Community Center Angel Fired Pizza Angel Fire Fire Department Angel Fire Garden Club Angel Fire Resort Angel Fire Rotary Club Angel Fire Small Animal Hospital Angel Fire Visitor Center Art Up! Balloons Over Angel Fire Business After Hours Business Brief Carson National Forest Current Events Eagle Nest Elementary Eagle Nest Lake State Park Elements Employment Girl Scouts Holy Angels Catholic Church Jokes Kit Carson Coop Laguna Vista Lodge Missing Pet Moreno Valley Arts Council Moreno Valley High School Moreno Vally Arts Council Music From Angel Fire National Veterans Wellness & Healing Center Pub 'n Grub Recycling Roadrunner Tours Rotary Club of Angel Fire Shall We Dance? Shopping Shuter Library Stray Hearts Animal Shelter The TrailHead United Church of Angel Fire Vietnam Veteran's National Memorial Village of Angel Fire Zebadiah's Restaurant & Bar

[footer_backtotop]

Copyright © 1996-2019 Apok Technology, Inc. · All rights reserved. · Log in