State legislators passed $240 million worth of tax increases Wednesday after a heated debate on the House floor.
The measure, an essential component in completing the state budget, passed the House by a vote of 38-28, after being debated for nearly three hours. The bill will now go to the Governor’s desk for executive approval.
Speaker Ben Lujan (D-Santa Fe) said similar bills have been introduced in the past and he saw it as a necessary piece of legislation.
“It is not with great joy that we come into a session to increase revenues and place a burden on our citizens,” he said. “Let’s put this bill behind us.”
The omnibus tax bill rolled three separate Senate bills into one. It included a measure to allow municipalities to impose a 2 percent tax on all food items. This is to compensate for the annual payments cities have been receiving to make up for revenue losses after the food tax was eliminated in 1995. The state will now eliminate that subsidy.
The bill increases the state gross receipt tax by an eighth of a cent. It will also make changes to tax policies by allowing state and local deductions from federal taxes to be included as taxable New Mexico income and lowering the state low-income tax rebate requirement to include more people. The bill also creates a gross receipt tax for businesses that make out-of-state purchases, a practice that is not taxed under existing laws.
Many Republicans opposed the bill moving to the floor before being vetted in committee, which is the usual practice.
Rep. Keith Gardner said ignoring the tradition was damaging to the sanctity of the committee process.
“If we circumvent that process and bring it to the House floor, members may be uniformed on the content of the legislation,” he said. “Potentially, bad policy could pass unbeknownst to many members and could have adverse effects.”
Though there was a motion by Rep. Gardner to refer the bill to the Tax and Revenue Committee, the motion died at a vote of 39-24. Subsequent motions to separate the food tax from the bill and to strike it completely also failed.
Democrats empathized with Republicans, Rep. Al Park (D-Bernallilo) said. Though he did not want to enact tax increases, they were necessary to balance the budget.
“Yes, ladies and gentleman, ‘revenue enhancements’ is a euphemism for tax increases,” he said. “Some of these things I like; some of these things I hate, but we have to spread the pain.”
Park said though he generally did not support tax increases, the state’s fiscal circumstances called for it.
“These are not decisions I relish, but they are decisions I am willing to make,” he said.
During the debate, Senate leadership said that the omnibus bill was necessary to balance the budget. Sen. John Arthur Smith (D-Deming) said if the bill failed to pass the House without amendment, it would violate the agreement between House and Senate leadership.
“Then it would be back to the drawing board,” he said, putting pressure on members of the House.
The bill was opposed by every Republican member and six Democratic members.
The passage of the bill allowed the Senate to take up the state budget, which the House approved late Tuesday night.
If the budget bill passes without amendment, it will be sent to the Governor’s office and the session will come to a close. If the Senate makes changes to the budget, it will have to return to the House for concurrence. By law, the Legislature is required to submit a balanced budget to the governor.
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The session has already run one day over what was anticipated, and the session costs taxpayers roughly $50,000 a day.
