Special Session Report: No New Taxes in State Budget

Date: June 21, 2017

Governor Martinez kept her word, signs spending document to begin July 1 fiscal year

Gov. Susana Martinez and the New Mexico Legislature came together in a May special session to agree on a state budget.

The governor signed three of four bills the Legislature sent her during this brief time.

  • She put her signature on House Bill 1 restoring approximately $760 million in previously vetoed funding for New Mexico’s higher education institutions and legislative branch agencies for the budget year starting July 1. The bill also provides more dollars for financial aid programs and appropriates $400,000 for a formal study of the state’s tax code.
  • Also earning the governor’s OK was Senate Bill 1, which partly through complex bond transaction will raise about $100 million in one-time money for the state’s general fund. It was advertised to help ensure the state begins the new fiscal year with a balanced budget.
  • The third measure to earn gubernatorial approval was House Bill 2 that will create a rainy-day fund to help the state handle the volatility in its revenue streams, which fluctuate based on oil and gas prices and other economic activity. Provisions that imposed taxes were vetoed.

Vetoed

The lone veto was on Senate Bill 2 which would have imposed new taxes and fees on gasoline, vehicle purchases, and interstate trucking to raise $73 million to $94 million next year.

The proposed tax would also have delayed the phase-in of a corporate income tax cut. The governor made it clear before Day 1 of the special session that there were to be no new taxes or tax increases.

Governor Martinez kept her word.

Tax Reform

Both the governor’s administration and the Legislature agreed that comprehensive tax reform would not be a topic for the special session, given the complexity of the undertaking. But both legislators and the state’s chief executive also agreed tax reform must be dealt with in the 2018 legislative session.

To that end, the state’s policymakers are touting this summer and fall as the time to develop a reform structure for next session’s consideration. It will not be a painless process. NFIB will be especially vigilant of all proceedings and when needed, remind legislators of the effects on small business of all proposals.

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