Passed a budget, I mean.
Legislators were able to avert further significant cuts to education, public safety and health care. This was good, because maintaining necessary funding levels for these critical programs is the best path to pulling out of the recession.
However, the 2011 budget plan it approved is a mixed bag for those who truly care about tax fairness for low income and working families.
Let’s review what’s actually in the new plan.
We’ve got some regressive taxes – the kind that affect those least able to pay. The list includes a new two percent tax on food. That’s a big hit for low income and working families, who studies indicate spend a higher proportion of their income on food.
We’ve got a new one-eighth percent additional tax on sales, which will affect, well…everyone in New Mexico who ever buys something. Again, not hitting the ones most able to pay.
And we’ve got an additional 75¢ tax on cigarettes, which when added to the existing federal tax of $1.01, would raise the average price of a pack from $4.60 to $5.35. Taxes on cigarettes and alcohol are commonly known as sin taxes.
What’s not in the budget? Any sort of progressive taxes, including a combined reporting measure that would make large, out-of-state corporations pay their fair share on income they make in New Mexico.
Also proposed, but not adopted: A surtax on the income of the state’s richest residents.
As the session ends, I see lots of coverage from the mainstream media about the all the tax hikes New Mexicans will be forced to endure to maintain necessary services like education, transportation and public safety.
But I think the real question New Mexicans need to ask their legislative leaders isn’t “Why did you raise our taxes,” but rather “When will the rich and out-of-state corporations be asked to pay their fair share?”
That’s what Sen. Finance Committee Chairman John Arthur Smith told the New Mexico Independent today as legislators met for their third day of the special budget-only session.
Smith told the news site that if the food tax is taken out of the House bill or amended in any way, it could torpedo the legislature’s chances of approving a budget during this special session.
Besides spooking legislators, Smith’s threat brings about a worst–case scenario that strikes fear into the hearts of New Mexicans who just want to see a budget deal cut.
But how credible is it…and why is Smith insisting on levying a food tax on New Mexicans while steadfastly refusing to consider closing the tax loophole that allows out-of-state corporations to avoid paying their fair share?
It is no secret that Smith strongly supports reinstating the food tax, which would impose a gross receipts tax on all food items. He introduced the bill calling for it in this session as well as during the last regular session.
But the food tax is problematic for so many reasons – not the least being that studies show that poor and working families spend a larger percentage of their income on food, and thus would be disproportionately affected by the tax.
Because of their disproportionate effect on the poor, food taxes fall into the category of so-called “regressive” taxes.
In fact, with the food tax and a proposed increase in the overall gross receipts (sales) tax, the entire omnibus bill put forth by legislators places a unduly regressive burden on New Mexico’s lower-income families.
Check out what the Institute on Taxation and Economic Policy had to say about New Mexico’s omnibus bill here.
Smith, who is calling all of the shots in the Senate during this session as head of the powerful Finance Committee, refuses to consider the significant amount of revenue that could be raised by instituting more “progressive” taxes, or ones that require those who earn more to pay their fair share.
Take combined reporting, which would require large companies who do business in New Mexico to pay taxes on income they make in New Mexico. Can you believe the state’s tax code currently allows those companies to avoid doing just that?
According to Sen. Peter Wirth, who introduced a combined reporting bill in the regular session and again in the current special session, implementing the measure could painlessly generate millions of dollars for the state coffers.
Don’t be fooled by Smith’s threats. It’s still not too late for legislators to throw out the food tax and adopt more progressive methods of taxation to benefit all New Mexicans.
Tags: Food Tax, regressive tax, Sen. John Arthur Smith, Sen. Peter Wirth
Monday was the start of the Special Session - a time set aside (at a cost to the taxpayers of $50k a day) for the New Mexico Legislature to finally come together to come up with a budget for the state.
Many New Mexicans disagree with the fact that the current budget deal includes regressive measures like the food tax to shore up the budget instead of progressive moves like rescinding tax breaks for the rich and taxing out-of-state corporations like Wal-Mart.
Yet our state legislators still convened to try and finalize the budget they’ve been working on the past week.
Well, most legislators were at the Roundhouse on Monday. However, Sen. David Ulibarri of Grants decided it would be best to go testify on behalf of big oil and gas interests at yesterday’s Environment Improvement Board (EIB) hearing instead of helping to figure out the state budget.
On the EIB’s agenda was a petition by a local, environmental non-profit, New Energy Economy, requesting the EIB establish a cap on in-state greenhouse gas emission for reductions of the gases of 25% below 1990 levels by the year 2020.
This has obviously been met with much opposition from the oil, gas, and coal burning industries in New Mexico, because it aims to set regulations on their ability to pollute the air in our state. That opposition has also included a few legislators from southern New Mexico. But at Monday’s EIB hearing Senator Ulibarri chimed in with his support as well.
Advocates for the cap had many passionate and persuasive arguments concerning serious health effects of pollution, while opponents took to arguing from an economics point of view.
From an Alamogordo News article on the hearing:
I have treated too many babies and children and adults who were gasping for air because of asthma and other respiratory diseases that were caused or worsened by pollutants that could be eliminated or decreased with existing technologies,” Dr. Bruce Trigg told the board.
Tags: carbon cap, emissions, Environmental Improvement Board, special session
The House Tax and Revenue Committee just passed a cigarette tax that would add 75 cents to the cost of a pack. The bill, which cleared the committee on a 10-6 vote, would generate an estimated $33 million for the state, including $10 million that would go toward public education.
It was the first significant agreement on ANY measure that would help the state close a projected shortfall of hundreds of millions of dollars for the fiscal year 2011.
Congratulations, legislators – now could you please take advantage of the momentum and consider the many other non-regressive revenue options on the table?
Instead of the punitive and controversial food tax favored by Senate Finance Committee Chairman John Arthur Smith, how about the non-controversial PIT-add back?
Instead of a gross receipts tax on New Mexicans, how about making out-of-state corporations pay their fair share?
Just asking.
Tags: combined reporting, Food Tax, gross receipts tax, PIT add back, Sen. John Arthur Smith
If you want to get the skinny on how today’s Special Session of the legislature is shaping up, you are well advised to check out Barb’s latest posts on DFNM (look here, here and here).
So forget your Smith & Wesson. Now it’s Smith (Senator John Arthur) and Jennings (Senator Tim), the leaders of the conservative coalition in the state senate, who have a gun pointed at the heads of the House Democratic leadership – and the latter blinked.
To some observers, it is still rather astonishing just how quickly, and obligingly, they capitulated.
Indeed, during the regular session the House and Senate each passed different plans to address the state’s revenue shortfall. That session ended with the two sides unable to come to an agreement. And while both plans imposed a disproportionate share of tax increases on the poor and middle class New Mexicans, the Senate version was especially egregious.
The Senate Plan hit low-income families with tax hikes roughly 18 times higher, as a share of income, than those on the wealthiest taxpayers.
Now with the House’s apparent surrender to the newest iteration of the Smith and Jennings tax injustice plan, it would seem that any hope of introducing some much needed progressivity into New Mexico’s grossly unfair tax structure is off the table.
Here’s a good recap from the Santa Fe Reporter on where the tax burden currently falls in New Mexico.
Tags: NM Legislature, Sen. John Arthur Smith, Sen. Tim Jennings, Special Session 2010, tax policy
It’s taken me a while to settle down and write this post-session wrap-up. Partly because I’ve been so annoyed with some of what I saw happen at the Legislature, and partly because I wanted to get the chance to compare notes with others who experienced it too.
It’s been a week now – so, I’ve done my comparing, and I’ve found plenty of others who had the same thoughts as me.
One overwhelming theme I witnessed during the most recent 30-day session was the continuing lack of public access to the legislature.
Important decisions were literally made in the middle of the night.
I sat in a Tax and Revenue Committee after midnight on the last night of the session listening to legislators debate (and reject) a cigarette tax that could have raised millions for the state. No one was there to hear the pros and cons except the legislators, their staffers, a bunch of paid lobbyists and a handful of reporters.
And the so-called tortilla tax – remember that? That much-maligned measure sailed through the Senate in the dregs of a Saturday morning. It would be an understatement to say that the rest of New Mexico was pretty mad when it woke up and heard the news.
Am I naïve to think that is just plain wrong?
Part of the problem of public access could be solved if there was better public notice of when bills will be heard in committee or on the floor. I saw a lot of bewildered “regular” people up there waiting to testify on bills that affected them. Should legislators be required to give more notice? For the sake of the public, perhaps so.
This is where webcasting the committees could also help. Sen. Eric Griego had proposed an amendment which would have done so, but didn’t get the chance to introduce it on the floor. And what about archiving those webcasts, so the public can watch them later? Even a webcast committee hearing at midnight won’t get an audience — but the public can access an archive.
One last thing – toward the frantic end of the session, I noticed an awful lot of Republicans in the House using up the maximum three hour debate limit per bill in order to run out the clock. Good bills die in the waning moments of the session because of those “minibusters.”
Similarly, SR1, the measure to expand the number of cameras used for webcasting of Senate floor proceedings, languished for four days on the table before dying when the session ended. This happened despite Leader Michael Sanchez, who controls the Senate calendar, suggesting that he would bring it to a vote.
But inexplicably it didn’t happen. It was all a big tease.
The fact that I saw some legislators waste colossal amounts of time made it hard for me to accept the excuse offered by some Thursday afternoon that they were “so close” on the budget and simply “ran out of time.” I know some legislators did work hard and were as frustrated as the rest of the state when the session ended without a budget.
Legislators were supposed to meet this week Wednesday to finish their job, but got a last minute-reprieve from Governor Bill Richardson.
When they reconvene next Monday at noon, let’s hope they make much better use of their time.
Tags: Gov. Bill Richardson, New Mexico Legislature, Sen. Eric Griego, Sen. Michael Sanchez, Tortilla Tax, webcasting legislature
I watched the news last night and learned that today the Credit Card Accountability Responsibility and Disclosure Act of 2009 will go into effect. Essentially this act is looking to provide protection to the many credit card users in our country by forcing credit card companies to show their customers how long it will take them to pay off their account when paying the minimum payment, making customers agree to penalty fees or the company can’t charge them, and limiting interest rate increases to affect new purchases and not the existing balance.
So, I thought, this is what the credit card companies were prepping for the past few months as they raised everyone’s interest rates (even if they had never been late on a payment) and began looking for other ways to essentially keep taking their customers money.
The passage of this credit card reform act is definitely a step in the right direction, but don’t think that it takes the ball out of the credit card companies’ court. Rather, they have already identified new ways to raise their revenues since they just had some of their most lucrative revenue raisers taken away.
A Wall Street Journal article entitled, “Credit Card Fees: The New Traps” explains some of the new methods credit card companies will be using:
Banning these and other profitable tactics is expected to cost the card industry at least $12 billion a year in lost revenue, according to law firm Morrison & Foerster. This has sent the industry scrambling to find new sources of revenue. So get ready for higher annual fees, higher balance-transfer charges, and growing charges for overseas transactions.
“There are countless fees that can be introduced and rates can go through the roof,” says Curtis Arnold, founder of U.S. Citizens for Fair Credit Card Terms Inc., a consumer-advocacy group.
Consider the new offer from Citigroup Inc. The bank will give cardholders a credit of 10% on their total interest charge if they pay on time. That sounds enticing, except that if you don’t pay on time, your interest rate is 29%.
What’s crazy is that a friend of mine just told me today that he recently received a letter in the mail for a credit card he hasn’t even activated. The credit card company made envelope look very simple and not important, yet the letter inside explained that if he didn’t call them soon, they were going to begin charging him a $60 annual fee for his card (one that he hasn’t ever used at that!).
Tags: credit card industry, credit card reform, new regulations
The New Mexico Independent describes perfectly the differences between Senate and House budgets that brought about the session:
“In the two weeks prior to Thursday, both chambers had approved competing budgets. The philosophic disagreement that drove a wedge between them was a classic one: House Democratic leaders preferred raising revenues through tax and fee increases to the deeper spending cuts Senate Democratic leadership wanted.
The Senate proposal recommended spending $120 million less than the House plan — $5.3 billion to $5.426 billion. It also raised nearly half the revenue proposed in the House bill, generating $180 million through tax increases vs. $340 million in the House bill.
Complicating the philosophical disagreements was the sheer size of New Mexico’s money problems: few people around the Capitol can remember budget troubles this bad—even veterans who date themselves to the mid 1970s.”
To go even deeper, one of the budget recommendations from the Senate was to increase taxes on many of our staple foods, while the House wanted to increase gross receipts taxes.
Yet hardly anywhere to be seen in either of these budgets was the recommendations that came from many at the Better Choices NM coalition.
The Better Choices NM coalition is an alliance of small businesses, members of the faith community, labor groups and nonprofit organizations who have joined forces in an effort to encourage legislators to make a better choice for New Mexico.
This special session could be a blessing in disguise, as it gives our legislators one more opportunity to consider what choices they can make for the better of all New Mexicans.
Let’s review some of the Better Choices recommendations they have listed on their website:
● Repeal tax cuts for the highest income New Mexicans.
Right now someone making $16k in New Mexico pays the same amount of taxes as millionaires in New Mexico.
● Eliminate corporate tax loopholes to level the playing field for New Mexico’s small businesses.
Currently big corporations like Wal-Mart pay NO taxes (emphasis mine) on the products that they sell in New Mexico, and if you’ve lived in any small New Mexico town, you know they buy tons of Wal-Mart products.
● Preserve jobs and services.
Simply put we do not want to end up laying off large amounts of our workforce and have to shutt off some of our streetlights as they did in Colorado Springs as a result of not raising enough revenues to preserve services.
So as we move into the special session, all of us who want to stop education from being cut, employees from being laid off, and many of our state services from being weakened should contact their legislator and let them know to support better choices for all New Mexicans.
Tags: Better Choices NM, budget, Legislative session, special session
Clearly’s New Look
Today we’d like to introduce a new look for Clearly New Mexico – one that we hope makes your visits to our site a bit more pleasant visually. Don’t worry – we’ll still feature the same biting commentary and socially responsible take on the issues we’ve become known for.
We did add one little thing – a weekly question – which we’d like our thoughtful readers to answer in comments we’ll publish on the site.
Thanks for sticking with us through our redesign – and tell your friends to come check out Clearly’s new look, too!
Tracy Dingmann
Tags: Clearly New Mexico