New Mexico House OKs tax hikes to balance budget

Upper-income New Mexicans could pay a surtax to help balance the state's budget and others will pay higher sales taxes on goods and services under measures approved Friday by the House.

The proposals were part of a tax package providing $400 million next year to shore up state finances. If enacted, the measures would become the largest tax increase package in more than 20 years.

House Speaker Ben Lujan, a Santa Fe Democrat, said tax increases were necessary to prevent damaging cutbacks in public schools and government services, such as health care for the needy.

"We don't take pride or joy in increasing taxes," Lujan said.
However, Republicans said the budget should be cut more before taxes are increased. State spending has increased by 35 percent since 2003, even after budget cuts during the past two years.

"We can't tax our way to prosperity," said Rep. Donald Bratton, R-Hobbs.
Spending from the state's main budget account has been trimmed by $700 million during the past two years as the economy and state revenues slumped, according to Lujan. However, part of those cuts has been offset by using federal economic stimulus money to pay for state programs, mainly education and health care. As we all know the education systems across the state have cut their programs, sporting schedules and the teachers’ salaries are some of the lowest in the country.

Approved by the House were measures to:

-- Increase the gross receipts tax by a half cent starting in July -- from 5 percent to 5.5 percent -- and phase out the higher rate in 2014. The proposal would generate $238 million next year. The bill passed 34-32.

-- Impose 1.5 percent surtax on upper-income New Mexicans for three years. Married couples would pay the surtax on taxable income of more than $200,000 if they file joint returns. Single taxpayers would pay the surtax on income of more than $133,000. The surtax would provide $67 million next year. The bill passed 36-32.

-- Improve income tax compliance by out-of-state residents. The measure will expand tax withholding requirements on partnerships and certain small corporations. Lawmakers expect to collect nearly $16 million next year. Supporters of the bill contend the measure was not a tax increase. The measure was approved 42-25.

Also under consideration is a measure to generate $90 million by eliminating an income tax deduction for some taxpayers.

Besides tax bills, the House was to debate a budget blueprint that allocates more than $5.6 billion for public education and general government programs in the 2011 fiscal year, which starts in July. The budget factors in new revenues from tax increases and would trim spending by 1.4 percent.

According to the Legislative Council Service, one of the largest tax packages in New Mexico history came in 1986 when income, gross receipts and other taxes were raised by $150 million -- representing nearly 11 percent of the state budget then.

How many of our state legislators have voted themselves a pay increase when the majority of our citizens live on half of what they make as a salary? I think they should cut their pay increases for one year and apply it to part of the state’s budget crisis then they would be one step closer in dealing with living in our economy now.

As always if you have any questions or comments please email me at rondazaragoza@gmail.com. I will try and reply to your question within 24-48 hours of receipt.