Democracy for New Mexico

Javier Gonzales: Summing Up the 2011 NM Legislative Session

This is a guest blog by Javier Gonzales of Santa Fe, who is chairman of the Democratic Party of New Mexico.

If I had to sum up the 2011 legislative session it would be this: Democrats were focused like a laser beam on jobs, education, ethics, and preserving our land and water, while Gov. Susana Martínez spent her historic first legislative session pushing wedge issue after wedge issue. Her promise to New Mexicans to focus on jobs never materialized, and our state and its struggling families are paying the price.

Most new governors use their first 60-day legislative session to drive an aggressive agenda to make an indelible mark on the state in an effort to move New Mexico forward. Rather than take advantage of significant political stock to bring forward a jobs initiative for New Mexicans, Susana Martínez spun her wheels and engaged in divisive campaign tactics. 

Her difficulty in transforming her role from prosecutor to governor was evident by where she focused her priorities. While the dialogue over driver's licenses for foreign nationals and voter ID have a place in public discourse, no one believes either addresses the issue of the historically high unemploy-ment rate New Mexicans are facing. 

And when Democrats came to the table to address this legislation and seek compromise on these divisive issues, she took to her courtroom methods and chastised legislators and demonized those who would be impacted by the legislation. Her "my way or the highway" approach caused her driver's license and voter ID pet projects to be shelved, while all along, New Mexico's most pressing problem — a lack of jobs — continued unabated and unaddressed. Hardly gubernatorial.

Javier at today's pro-workers rally in Albuquerque

As a result, when the final bell tolled on the 2011 legislative session, New Mexicans were left wondering if the governor's priorities were the same as theirs — or was there a national agenda that was being played at the Roundhouse?

The Republican playbook is very clear. And Susana Martínez has proven to be a very good study practitioner of the politics of division. Put divisive and wedge issues on the front of the debate, cut government funding to education, health care and workforce training all in the name of keeping taxes low for the wealthiest 1 percent. Attack environmental regulations in the name of job creation. Govern by creating fear among those you lead.

This session was a perfect opportunity to put aside partisan politics and focus on what really matters to New Mexicans. Instead, we got endless debates on driver's licenses and Martínez making political attack ads against legislators whose only offense was disagreeing with her positions.

Democrats proposed numerous jobs bills to help get New Mexico's economy back on track. They passed a balanced budget while cutting the size of state government and fought tooth and nail to keep the film credits in place. Democrats also passed a bill to remove the governor from the State Investment Council.

Meanwhile, Martínez's only action on jobs will likely kill jobs in the state. During the course of the session, Martínez actively fought to slash a film incentive that has been responsible for the creation of 12,000 jobs and has supported hundreds of local businesses that have thrived servicing film productions by offering everything from catering to lodging to construction services.

And while Martínez fought to kill film incentives, she largely ignored trimming the tax breaks given to other industries more closely associated with her political benefactors.

The lack of leadership shown by Martínez this session was surprising to say the least and disappointing for many New Mexicans who truly hoped for bold leadership. Her inability to articulate even the simplest agenda related to jobs would be comical were it not for the tens of thousands of New Mexicans who need their governor out front on economic issues — devising incentives to draw new business here and investing in our workforce.

Those New Mexicans received no such hope from Gov. Martínez this year.

This is a guest blog by Javier Gonzales, who is running for his second term as chairman of the Democratic Party of New Mexico. You can contact him via his website or Facebook page. To submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link at the upper left-hand corner of the page.

Sen. Keller's Job Creation Bill Goes to House Floor for Final Vote

A Senate bill to stimulate New Mexico business and pump thousands of jobs into the state is nearing the floor of the House of Representatives. Senate Bill 19 (SB 19), sponsored by Senator Tim Keller (D-Bernalillo-17), tightens qualifications and levels the playing field for businesses who want to take part in the In-State Business Procurement Advantage.

“Better leveraging our in-state requirements could mean the addition of more than 3,000 jobs for resident workers with New Mexico-owned companies, which might have otherwise gone to out-of-state businesses,” Sen. Keller said.

The existing system is meant to give local companies an edge by granting them a five percent preference in pursuing state contracts. Sen. Keller said the system has been abused by out-of-state companies that only meet New Mexico tax residency requirements on a short-term basis before bidding on state contracts. SB 19 dramatically tightens requirements to make sure tax dollars go to New Mexicans. 

Supporters of SB 19 believe the tighter residency requirements, additional oversight and increased enforcement will force out-of-state bidders to be more cautious about in-state requirements. Sen. Keller met with industry leaders from construction, contracting, real estate development, labor and professional services and with the agricultural community to create a broad consensus in drafting this legislation. 

“New Mexico will be able to enforce a much-needed preference for our local business owners while encouraging entrepreneurship from farm work to professional services to construction management,” Sen. Keller said.

Senator Keller’s SB 19 passed out of the Senate on a 35 to 1 vote before heading to the New Mexico House. It received a unanimous “Do Pass” recommendation from both the House Business and Industry Committee (HBIC) and Judiciary Committee (HJC). The bill now goes to the House Floor for a final vote.

Take Action: Contact your representative and urge him or her to vote yes on SB 19.

State Government Restructuring Task Force to Hold First Meeting in Santa Fe

The Government Restructuring Task Force will meet in Room 307 of the State Capitol in Santa Fe at 10:00 AM on Wednesday, April 21, 2010. The public is welcome to attend.

“The purpose of this initial meeting will be to develop a plan to consider reorganization of state government into the most efficient and effective one possible,” said Rep. Luciano “Lucky” Varela (D-Santa Fe-48) in a written statement. After selection of the chair and vice-chair of the committee, the group will hear a summary of House Bill 237, sponsored by Representative Varela, which created the task force.

“This committee will determine ways to better serve New Mexicans. We are committed to saving New Mexico money by making state government leaner and more efficient,” said Rep. Al Park (D-Bernalillo-26).

The group will study the structure and funding of New Mexico government, as well as previous restructuring initiatives. A number of other states have made efforts at restructuring in recent years, and the group will look at a summary of these efforts. A work plan and future meeting schedule will be established. As always, public comment is welcome and encouraged.

Click for more information and the most current committee agendas and calendars.

State Senate Majority Leader Michael Sanchez Calls Out Governor on Food Tax Reversal

State Senate Majority Floor Leader Michael S. Sanchez (D-Belen) released the following statement this afternoon after New Mexico Governor Bill Richardson vetoed legislation that would partially reinstate the gross receipts tax on the sale of food:

“I am surprised that the governor has decided to take this action. Had he indicated three weeks ago that he would not support the legislation we would have taken a different approach. He was involved every step of the way. At no time during the special session did he raise any objections. He was very clear about what he wouldn’t support which is why the legislative and executive compromise we crafted didn’t include an income tax increase or a requirement that all corporations pay their fair share of taxes.

“The governor’s veto today puts the state’s financial future at even greater peril. His approach to balancing the budget relies heavily on general fund reserves and federal stimulus money. While this may work in the short-term and carry him through the end of his term, these are one-time revenue sources. Unless the economy drastically improves, the next governor will have to take action to raise recurring revenue for our state’s budget or make cuts that will impair services to New Mexicans.

“This action is unprecedented in the state’s history. The legislature will look at all appropriate action if it determines the governor has overstepped his veto authority.”

NM Voices for Children Applauds Food Tax Veto, Decrys Other Budget Changes

New Mexico Voices for Children released this statement after Governor Richardson signed the state budget for the upcoming fiscal year: 

"We're pleased that the Governor vetoed the food tax, which would have hit low-income families the hardest. However, we're disappointed with his veto of the increase in the Low-Income Comprehensive Tax Rebate and his decision to divert $11 million that had been earmarked for early childhood care and education programs for use elsewhere."

The group noted that the Low-Income Comprehensive Tax Rebate (LICTR) helps offset regressive taxes for the very poorest of the poor. It had been raised in an effort to offset the food tax and the increased sales tax, known as the gross receipts tax (GRT). According to a recent report from the Institute on Taxation and Economic Policy, New Mexico's tax structure is already regressive, and residents at the lowest income levels pay more than twice as much in state and local taxes as the wealthiest pay, as a percentage of their income.

"We didn't believe the food tax should have been in the package in the first place," said Bill Jordan, Policy Director for NM Voices. "But the LICTR increase was intended to offset the one-eighth cent increase in the GRT as well, and unfortunately that increase is still intact. This will make it harder for working families to buy non-food necessities like diapers and aspirin."

The $11 million earmarked for early care and education programs was to come from the 75 cent-per-pack increase in the tobacco tax. "We're pleased that the Governor kept the tobacco tax and made it permanent, because that will keep young people from taking up smoking and convince some long-time smokers to quit," said Jordan. "But his decision to divert the $11 million from programs that help our kids succeed in school is a real disappointment. These programs have already taken a big hit from recent budget cuts," he added.

"We look forward to working with state leaders to craft future budgets that prioritize children and working families," added Jordan.

Diane Denish Issues Statement Applauding Veto of Food Tax

Lt. Gov. Diane Denish issued a statement today applauding the veto of the food tax, which would target middle-class New Mexico families, and continued to call for cost-saving reforms to make government more efficient.

“With so many New Mexicans struggling to put food on the table, a new tax on food is absolutely the last thing our families need," Denish said. "As I’ve said from Day One, the Legislature should have done everything possible to cut costs and make government more efficient before even considering regressive taxes that target working families. Unfortunately, that didn’t happen."

"As Governor, I’ll do things differently," Denish added. I’ve put forward a plan to save taxpayers $450 million over the next five years. By consolidating agencies, eliminating cabinet positions, cutting political appointees and spending more wisely, we can save the taxpayers millions. New Mexico families are tightening their belts; it’s time state government did the same thing.”

To read more about Diane's reform plan to save taxpayer’s $450 million, click . In addition, Denish pointed out that she was the first candidate for Governor to speak out against the food tax, issuing an in December, as well as a statement expressing her opposition.

Gov. Bill Richardson Vetoes Food Tax; Signs Cigarette Tax and Budget Bill

Governor Bill Richardson vetoed the food tax today in the final legislative action of his two terms as governor.

“I am not willing to put this burden on working families in the form of an unfair tax on food. I agree with those who call this a cruel tax,” Governor Richardson said in a statement released by his office. “It is especially cruel during the worst financial crisis New Mexico has ever experienced."

Governor Richardson explained that he made good on a campaign promise when he led the charge in 2004 to eliminate the tax on food. The Senate insisted on including a partial reinstatement of the food tax as part of a larger revenue bill passed during the recent special session. Governor Richardson signed the revenue package, but line-item vetoed the tax on food.

“In 2004, I told New Mexicans that we eliminated the food tax forever, putting hundreds of dollars into the pockets of working families,” Governor Richardson said. “I’m not about to open the door again and resurrect a tax on food that disproportionately hurts poor and middle-income families. There is no reason to tax so basic a necessity as food in order to balance the budget.”

In addition to his action on the revenue bill (Senate Bill 10) Governor Richardson also signed two other pieces of the budget-balancing package passed during the special session.

Budget (House Bill 2) – Governor Richardson signed the budget bill, which includes language that gives the Governor the authority to make additional spending cuts across state government. The Governor will exercise that option if cash reserves decline as a result of the food tax veto. The Governor is also prepared to use $20 million in stimulus money to balance the budget.

Cigarette Tax (House Bill 3) – Governor Richardson signed a bill that increases the tax on cigarettes by 75 cents per pack. Because the bill was intended to raise revenue to balance the budget, the Governor vetoed earmarks that would have diverted $13.3 million from the tax for other purposes. The veto means the money will go to the General Fund, to help bolster reserves. The Governor also vetoed language that would have ended the tax after four years. Because the tax is meant to deter young people from smoking, the sunset provision is not necessary.

We understand the Governor also vetoed $5.3 million in tax rebates for low-income families and $11 million for early childhood programs.

NM Legislature Passes Budget and Tax Package Bills, Session Should End Today

We're almost at the end of the dismal and disturbing special session of the New Mexico Legislature. Yesterday, the House passed the Senate's omnibus tax bill, CS for SB 10, 12, 13, by a margin of 38-28 after about three hours of debate on the House floor. Five Democratic Representatives voted no: Joe Campos (Santa Rosa), Karen Giannini (Albuquerque 30), Ben Rodefer (Corrales), Debbie Rodella (Espanola) and Jeff Steinborn (Las Cruces 37). One Republican voted yes: Jeannette Wallace of Los Alamos. Three Democrats were excused -- Nate Cote (Las Cruces 53), Moe Maestas (Albuquerque 16) and Sandra Jeff (Crownpoint), along with one Republican --Nora Espinoza (Roswell) -- who has been out of the country for the entire special session.

Before the vote, Republicans forced a "call of the House" that required the chamber's doors to be locked and missing members who had not been excused to be sought out by state police to force their return to the House floor. High drama in the Roundhouse.

It's estimated the taxes in the omnibus bill will raise about $200 million in revenues next fiscal year. The package passed the Senate on Tuesday, by a margin of 25-15.

Painful Process
There was a lot of complaining by Republicans yesterday because the House leadership decided to bypass a hearing for the tax bill in the House Revenue and Taxation Committee (HRTC) and bring it directly to the floor. Clearly, there was some fear on the part of the Dem leadership that the tax measure wouldn't pass in the committee because its membership includes Reps. Ben Rodefer, Sandra Jeff, Andrew Barreras and Nate Cote, who were known to have misgivings about it. Barreras ended up voting for the bill on the House floor, but the others either voted no or were excused.

House Dems had been warned by Sen. John Arthur Smith not to tamper with anything in the tax package -- especially the food tax -- or the compromise deal would fall apart and necessitate another special session, probably in May. Smith, who some are calling the Food Tax King, held up the House budget bill, HB 2, from coming to the Senate floor until the tax package was approved in the House.

There had reportedly been a lot of talk in the House of either altering or eliminating the food tax, but threats by leadership in both Houses (and, no doubt, maneuvering by the Governor) apparently worked well enough to stop any of that from happening. In the end, almost all of the House Dems fell into line rather than attempting to fight to improve the Senate version of the tax bill as some progressive Senators had hoped. I'm sure it was a fight just to get the House leadership to accept the Senate's improvements on the original deal.

Suffice it to say that many Dems weren't enthusiastic about voting for the final tax package, but they had little ability to change it given the narrow parameters set by Governor Bill Richardson and the Dem leadership in both chambers on what kinds of taxes would be ruled germane. And it was clear that if anything was altered, Sen. John Arthur Smith et al. would stop the budget cold and make everyone come back in a couple months to start all over.

Still, I found it very painful to listen to the House debate yesterday, having to endure hearing GOP members go on and on about how much the food tax -- which will average about 2% depending on the municipality -- will hurt ordinary New Mexicans. And to witness Dems stepping up to defend a tax that is still regressive, even if it's better than the one in the original deal, and $5 million has been added as a buffer to increase tax rebates for low-income citizens. Of course, the GOP solution would be to cut education, government services and Medicaid to the bone, not apply a high-earner surcharge or tax big-box corporations like local small businesses are taxed. As is often the case, their melodramatic expressions of concern about workers and the poor were shallow and expedient, at best.

After the tax package passed the House, the Senate convened to vote on HB 2. The budget bill detailing about $5.6 billion in spending was then approved on a party-line vote by a margin of 26-14.

Still to Go
Still to be voted on today is HB 3, the 75 cents a pack cigarette tax passed by the House as amended to earmark about a third of the taxes collected to education. It passed the Senate Finance Committee 7-2 today, but was amended so it will have to go back to the House for concurrence if it passes the Senate. The bill is expected to raise about $33 million in revenue.

According to Matt Reichbach on today's NMI live blog, "The bill as a whole has a four year sunset (added in the House) -- the 25¢ "earmark" for public education will now sunset after one year. Also, 12.5¢ will go towards both early childhood education and higher education (for a total of another 25¢). And one word was added ("or") somewhere in the bill to make protections against people buying cigarettes on tribal lands and reselling them off tribal lands stronger."

I know it's considered politically incorrect to say it, but I think it's bad government to make smokers pay extra for education. You'd think New Mexicans as a whole would be expected to support education through any taxes levied to pay for it. Smokers are already paying extra taxes supporting the expansion of SCHIP to provide health care coverage for more children. However, lawmakers love the cigarette tax because only a minority of smokers can be expected to complain about it and they can feel good about punishing the "smoking sinners" and ostensibly stopping teens from taking up the habit -- at least poor teens.

Notice that liquor, wealthy income, capital gains and big-box corporations were spared this session, except for higher taxes for those itemizing their deductions. Priorities, priorities.

Also still pending in the Senate is a vote on a number of capital projects around the state in the form of so-called GO bonds.

NM Senate: Compromise Seeks Fairer Tax Mix to Balance Budget

The New Mexico Senate passed a budget measure last night to break the budget impasse, "while achieving a fairer result for all New Mexicans" according to a statement released by the Senate leadership. Senate Finance Committee Substitute for Senate Bills 10, 12, and 13, which passed the Senate 25 to 15, raises approximately $200 million through a combination of gross receipts and personal income tax impositions. Now the House will have to pass the bill. They will take it up today, after having their appropriations bill (HB 2) late last night on a vote of 39-27, with one absent and four excused.

Here's the post I wrote last night on the Senate tax bill. But I thought you'd like to see the Senate press release and how it describes the legislation:

The bill provides a diversified mix of taxes as it generates a stable and diverse source of revenue while avoiding deep cuts in core state programs including, education, healthcare and public safety. As passed, SFC Committee Substitute for SB 10, 12, 13:

• reduces the Gross Receipts Tax increase proposed in Senate Bill 12 from one-fourth percent to one-eighth percent;
• eliminates an income tax loophole that allows wealthier New Mexicans to double federal income tax deductions and thus reduce their state tax liability;
• increases the Low Income Comprehensive Tax Rebate to help the poorest New Mexico families; and
• requires more out-of-state businesses to pay compensating tax and helps local businesses (who pay GRT) remain competitive.

“Finding agreement was no easy task. This compromise incorporates the benefits of a broad based gross receipts tax and the more targeted progressive tax on higher incomes. I truly believe this package will do the least amount of harm to our most vulnerable New Mexicans,” said Senator Michael S. Sanchez (D-Valencia-29), Senate Majority Leader.

The Committee Substitute will save the State approximately $68 million by not having to replace revenue lost to counties and cities when food was exempt from taxation. "This bill is a way we can keep municipalities and counties from losing revenues they already count on," said Senate Pro Tempore Senator Timothy Z. Jennings (D- Chaves, Eddy, Lincoln & Otero-32).

Senator John Arthur Smith (D-Hidalgo, Luna & Sierra-35), Chair of the Senate Finance Committee added, “The measure is much less regressive than the original proposal and minimizes the damage to local budgets.”

With regard to eliminating the deduction loophole, Sen. Carlos R. Cisneros (D-Los Alamos, Rio Arriba, Santa Fe and Taos), Vice-Chair of the Senate Finance Committee, pointed out, "The tax loophole mostly benefits those earning above $100,000 a year. It just doesn't make sense. New Mexico is one of only five states that allow itemized deductions to be counted in calculating state income tax," he said.

The Committee Substitute also means that soft drinks and junk food will be equally taxed with other food items, said Senator Dede Feldman (D-Bernalillo-13), Chair of the Senate Public Affairs Committee. Her remarks were echoed by Sen. Bernadette M. Sanchez (D-Bernalillo-26), who added, “The revenue generated by the bill prevents additional cuts to education, disability, senior and many other needed services.”

Click for tables here, and here (pdf) illustrating the changes from the original tax plan. And here's a (pdf) of the bill's provisions prepared by the Senate. (I don't know why that "PDF Complete" image is embedded in the pdf sent out by the Senate, but I haven't been able to remove it.)

(Updated) NM Senate Dems Succeed in Making Tax Deal More Progressive, But Problems Remain Before Vote

Update: Committee Substitute for SB 10, SB 12, SB 13, the Omnibus Tax Bill, passed last night by a margin of 25-15. The only Democrat to vote no was Sen. Cisco McSorley (D-Albuquerque). Sen. Stephen Fischmann (D-Mesilla Park) was excused, as was Sen. Steven Neville (R-Aztec).
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Debate is supposed to be starting soon (at least in legislative time) in the New Mexico Senate on Senate Finance Committee substitute for SB 10 (low-income tax rebate), SB 12 (food tax) and SB 13 (tax on federal refund for itemizers), the Omnibus Tax Bill. "Omnibus" -- yes, that means it's one bill and only one bill. In other words, the Senate leadership, working through the Senate Finance Committee, set the trap on this one. There'll be no voting on the three individual pieces of the tax puzzle -- it's all or nothing. (You can follow the action on NMI's live blog.)

That's a tried and true way to muster support from those who may dislike one or two taxes included in the bill, but who may be enticed or pressured to vote for the package because it's better than the original proposal. This is especially true if, when nothing passes, that's all she wrote. This is the same trick being used with the health care reform bill in the Congress. All the negotiations go on before the bill is put into final form and then it's just an up or down vote, period. Win or lose. In this case, if the bill fails, everyone goes home only to have another special session called at the pleasure of the Governor.

What's in the tax deal now (at least as it stands now)?

• The general gross receipts tax was decreased from a quarter of a cent in the original deal to an eighth of a cent, cutting that in half so the hit on the poor, working class and middle class isn't quite as bad.

• The so-called corporate compensation measure that taxes businesses if they do most of their net sales in New Mexico, which is expected to bring in about $11 million this year and about $50 million next year. This will have little impact on ordinary New Mexicans

• An increase in the low-income tax rebate with the rebate kicking in at $25,000 a year and below in earnings for an individual. I understand this is better than what was in the original deal. It amounts to about $5 million.

• The so-called PID add back, which would require those who itemize their tax deductions on the federal form to pay state taxes on their federal tax refunds. This would fall on those in higher tax brackets because they are the ones who itemize, so it's considered to be a fairly progressive tax.

• The re-application of the food tax, but with municipalities giving up their compensating funds from the state. Instead, the state would essentially tax food directly at the local GRT rate, not the state rate. The municipality could repeal it. (I think that's correct but it's confusing.) Yes, the food tax is still there. Like it's set in stone. Clearly, the powers that be wouldn't budge on this one, even though there was reportedly plenty of criticism about its inclusion. However, it's better than taxing food at the state GRT rate of about 7%. In Albuquerque, for example, I understand that food items would be taxed at 1.86%, although the rates in other cities would vary according to local ordinances, and cities will look like the bad guys. Still, it's better than the original idea to apply the entire state GRT on food.

• A 75 cent per pack cigarette tax, with 25 cents of that going directly to education. The original deal had no earmark for education. This provision isn't part of the Omnibus bill, but I understand it's part of the deal. I can't abide "sin" taxes, personally, but legislators love them, especially for cigs. There's only a minority to complain and they can cloak it in the myth that they're just doing for poor suckers what the poor suckers can't do for themselves. It's good for you!

The strategy being employed by Senate leaders and the Governor naturally puts progressive Senators between a rock and a hard place. Do they vote for a bill that, thanks to their negotiating work, now consists of about half progressive taxes and half regressive ones -- and hope the House can improve it even further -- or do they vote no and stop all the progress in the special session and go home?

Another complication is that the package can lose only five Dem votes and still pass. If it loses one more than that, Lt. Governor Diane Denish would have to break the tie. Depending on how you look at it, this would either give gubernatorial candidate Denish a chance to vote no -- thus underlining her differences with the current administration -- or put her in a position that's considered a no-win situation either way. Talk about being in the hot seat.

Strategic voting also extends to how the alphabetical roll call plays out. As Senators vote yes or no earlier in the process, those who come later in the roll call will be counting to see if their votes are needed for a win -- or if they can get away with voting no without upsetting the apple cart.

It seems apparent to me that our real Dem Senators fought for improvements in the package conceived by the conserva-Dems and the Governor -- and got some. I still think the package stinks, and that if real Dems were in control of the process it would be much better. But they aren't. Given the narrow parameters of Gov. Richardson's proclamation -- which precludes most of the progressive taxes real Democrats want -- this thing was gonna be ugly regardless. The decision each lawmaker will have to make is whether the package is so ugly it's better to go home, come back and start all over again, or whether it's been improved enough to make a compromise worthwhile. No doubt, opinions will vary.

Bottom Line: If this thing passes the Senate, it will be up to the House Dems to do their part to improve it even more. For instance, one would hope they could get the food tax replaced by an income tax surcharge on high earners, a measure that previously passed the House. Then it would be back in the Senate's court for concurrence.

The question is -- are real Dems in the House ready, willing and able to carry on the battle against the worst elements of the tax bill and not just give in to the leadership? I think we need to encourage them to fight, fight, fight. Click for contact info.

Think New Mexico: Read Citizen Letters Urging Defeat of Food Tax

This morning, Think New Mexico's Field Director, Jason Espinoza, hand-delivered 511 email letters to Governor Bill Richardson. The letters expressed opposition to the latest food tax legislation that is being proposed as part of a deal made by New Mexico's House and Senate leaders.

The letters came from all over the state through the Think New Mexico website. To get a feel for the passionate opposition ordinary people are expressing towards the food tax -- as well as the day-to-day struggles already being experienced by New Mexicans in this dicey economy -- read through a selection of the letters (pdf).

A few excerpts:

--Please do not impose a tax on food. I can barely pay my utilities, especially propane to heat my house and gas for my car. If I pay a tax on food, then I won't be able to pay for clothes; which are already taxed - so the state will lose the money on that sale, and other items that I won't be able to afford any more.

--My husband and I are on social security. As you know there won't be a cost of living increase for us for two years. In the midst of the most severe recession in seven decades, it is wrong to increase taxes on people living off of social security.

--As a family we do not eat out, except for special occasions and when we are out of town. With that said our grocery bill for 2009 was approximately $12000.00. So 5% would increase my grocery bill by $600.00 (8% would be $960.00).

To add your voice to the mix, visit the Think New Mexico website and write a letter of your own.

New ITEP Report: NM Special Session Tax Plan Hits Poor Hardest

An important new report was released today by the Institute on Taxation and Economic Policy (ITEP) in Washington DC. The report analyzes the tax increases agreed upon by House and Senate leadership in advance of this week's special legislative session, and finds that the agreed-upon plan would make New Mexico's already-unfair tax system even more so. The plan would impose its largest tax hikes on the very poorest New Mexicans. Measured as a share of income, the tax hikes on low-income families would be roughly eight times larger than the tax hikes on the very best-off taxpayers.

According to ITEP, the proposed budget plan:

... would impose over $220 million a year in new Gross Receipts Taxes (GRT) and cigarette taxes ... the agreement does not include any provisions to increase the personal income tax, but does include a small expansion of a low-income tax credit to help offset the regressive impact of this agreement. This ITEP analysis shows that even with the proposed expansion to this credit, the agreed-upon tax changes would fall much more heavily on low- and middle-income families than on the best-off New Mexicans.

Measuring the impact of the budget plan reveals:

Middle-income families would see a tax hike averaging 0.5 percent of their incomes -- about 6 times bigger than the tax hike on the best-off families.

The report also shows that modifying the legislative plan to include sensible personal income tax reforms could raise the same amount of revenue while imposing smaller tax hikes on the poorest eighty percent of the state's income distribution.

Regarding income tax reforms, the report says, "New Mexico lawmakers seeking to offset the unfairness of GRT increases with income tax reforms have a variety of sensible options."

• Repeal capital gains tax breaks. New Mexico is one of a handful of states that allow a deduction for 50 percent of capital gains. Virtually all of the benefits from this tax break go to the best-off New Mexicans.
• Repeal income tax rate reductions. Legislation enacted in 2003 gradually reduced the top income tax rate from 8.2 to 4.9 percent. The lion’s share of the benefits from these tax cuts go to upper-income families.
• Repeal itemized deductions for state taxes. Itemized deductions are upside-down tax subsidies, offering the biggest tax breaks to the best-off taxpayers. And New Mexico is one of only a handful of states that bizarrely offer a state income tax deduction for its own income tax. Repealing the itemized deduction for state and local taxes would enhance the fairness of New Mexico’s tax system without imposing higher tax rate.

This report can be found on the ITEP website.

Take Action: Please contact your legislators and urge them to do what's right for New Mexico's low- and middle-income families. Click for contact info.