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New Mexico Legislature Passes Sweeping Tax-Relief Plan

SANTA FE, N.M. (AP) — New Mexico’s Legislature passed a $1.1 billion tax relief package Saturday at the close of its annual session as lawmakers tapped a financial windfall from oil production in efforts to break through entrenched cycles of poverty with tax refunds to working families and provide new tax breaks and incentives to private industry.

The House gave final approval on a voice vote to an array of tax changes, including $500 individual rebates, tax credits of up to $600 per child, gradual reduction in taxes on sales and business services and new incentives for the film industry estimated at $90 million a year.

“Low-income families with children will get more as a result” of the changes, said Democratic state Rep. Derrick Lente of Sandia Pueblo, the lead House negotiator on the proposed tax changes.

Republican state Rep. Jason Harper of Rio Rancho said that “everyone is going to get a tax cut and that’s wonderful.”

Gov. Michelle Lujan Grisham has until April 7 to sign or veto the tax changes. A 0.5% decrease in gross receipts taxes on sales and business services will be phased in over several years after the governor cautioned against changes that could undermine crucial public spending on schools and public safety.

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State government would forgo an estimated $726 million of annual income by 2025 — and $1 billion by 2027, Lente said.

Several lawmakers expressed unease with the scale of tax cuts and incentives, questioning whether they would undermine state finances if income from the oil and natural gas industry falters in coming years. A 20% tax increase on alcohol sales to pay for addiction treatment programs also generated praise from legislators — and some criticism that the increase isn’t big enough to reduce consumption and address alcohol-related illness.

Earlier in the week, the Legislature approved a $9.6 billion general fund budget plan that increases annual spending obligations by 14% or nearly $1.2 billion dollars for the fiscal year running from July 2023 to June 2024, along with more than a $1 billion in direct general-fund spending on infrastructure projects.

The budget plan fulfills Lujan Grisham’s rallying cry to underwrite cradle-to-career public education by expanding no-pay daycare and preschool education and providing tuition-free college, from vocational training to professional certificates and four-year bachelor’s degrees.

“Congress is looking to New Mexico to see if they can replicate our success in cradle-to-career education,” Lujan Grisham said at a news conference Thursday.

The Democrat-led Legislature was scheduled to adjourn at noon Saturday after sending the governor bills intended to expand access to voting, shore up abortion rights and encourage the safe storage of firearms beyond the reach of children.

A voting rights bill would provide automatic voter registration at motor vehicle offices, help restore voting rights to felons immediately after incarceration and streamline the distribution of mail-in ballots in future elections. Other provisions facilitate absentee ballot voting in remote Native American communities.

Lawmakers in several Democratic-controlled states are advocating for sweeping voter protections in reaction to what they view as a broad undermining of voting rights by the Supreme Court, Republican-led states and inaction by Congress. Effort to restore voting rights to felons have emerged in many states as an area of rare bipartisan support.

The nation’s rift over abortion policy was on prominent display at the New Mexico state Capitol, as the governor signed a Democratic-sponsored bill to override local abortion-ban ordinances. Legislators sent the governor a second bill that would protect abortion doctors and patients from harassment or interference by out-of-state interests.

The abortion-rights initiatives also provide guaranteed access to gender-affirming health care related to distress over gender identity that doesn’t match a person’s assigned sex.

Bills were consummated with bipartisan support to shore up rural health care networks. Republicans in the legislative minority threw their support behind medical professionals and new limits on malpractice liability at independent health clinics that are a lifeline for rural communities.

The budget plan from the Legislature would increase Medicaid payment rates to health care providers under a $246 million increase in annual Medicaid spending. Proposed tax changes also would benefit health care providers.

Concerns about public safety and politically motivated violence loomed over the 60-day legislative session, after police in January arrested a failed Republican candidate in connection with a series of shootings targeting the homes of Democratic lawmakers.

As a precaution, lawmakers approved legislation that would allow them to keep home addresses confidential on a variety of public documents related to political campaigns and financial disclosures. Legislators also passed a bill to apply criminal penalties to so-called straw purchases of firearms, in which a weapon is bought legally in order to sell it to someone who can’t lawfully possess a gun.

The Legislature also responded to devastation wrought by unprecedented wildfires last year. A bill signed by Lujan Grisham will provide zero-interest loans to local governments to repair or replace public infrastructure destroyed by the conflagrations and post-fire flooding.

Legislators endorsed legislation that sets aside money in a trust to pay for forest restoration, agriculture projects, river stewardship work, wildlife conservation and developing the state’s outdoor recreation infrastructure.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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