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Wednesday, January 13, 2010
Gov. Talks Taxes
By Sean Olson
Journal Staff Writer
Although he still doesn't support the idea, Gov. Bill Richardson told Albuquerque business leaders Tuesday that he has not ruled out restoration of the state tax on food.
"I didn't say no, but I'm not particularly enthusiastic about it," Richardson said, referring to one of the most controversial proposals developing for the Legislature's coming "budget deficit session."
The state faces a $500 million budget shortfall, and proposals to end the exemption for gross receipts taxes on food would give the state $228 million in revenue. Lawmakers need significant new revenue, even with deep spending cuts, to close the gap.
Richardson told a crowd of about 400 people at a Greater Albuquerque Chamber of Commerce luncheon that he supported the 2004 exemption of food items from what's often called the sales tax, saying he thought the tax was regressive.
Terri Cole, president and CEO of the chamber, which supports restoration of the food tax as a means of closing the budget deficit, told the governor that the chamber has studies showing that repeal of the tax has not been effective in fighting hunger in New Mexico. The chamber has proposed directing $20 million from restored food tax revenues "to help the hungry."
"I'm not drawing any lines in the sand in this session, on any issue," said Richardson, for whom the 30-day session of the Legislature starting Jan. 19 will be the last of his two terms.
The Democratic governor went on to say, however, that he would not accept tax increases on personal income or capital gains or any decreases in tax credits or incentives for businesses.
He said "closing loopholes" in the food tax repeal, such as taxing soda and candy, would be more reasonable than restoring the tax on all food items.
Richardson also stressed his view that any tax increase adopted this year should be "temporary," with a life span of no more than three years.
The $500 million state revenue shortfall looms as the state prepares to budget roughly $5 billion in spending for the fiscal year that begins July 1. Richardson and the Legislative Finance Committee, in addition to outlining spending cuts, each have proposed budget-balancing measures that include tax increases to the tune of about $200 million. Neither proposal specifies which taxes should be increased or by how much.
"I think we should look at sin taxes," Richardson told the chamber group.
He said the 2004 legislation eliminating the food tax left loopholes that allowed items such as candy and soft drinks to go untaxed. Richardson said he thinks the state should look to taxing those items, as well as increasing taxes on tobacco.
A tax on soda and candy would bring in about $18 million in revenue. A $1-per-pack tax on cigarettes would add about $33 million. Another possible "sin tax," a 10-cent-per-drink tax increase on alcohol, would add about $42 million.
Resuming the food tax has been met with strong opposition from groups such as the New Mexico Conference of Catholic Bishops, the AARP and Think New Mexico, the private think tank that led the push for elimination of the tax in 2004. Those groups argue that the gross receipts tax, or sales tax, on food hits hardest the people who can afford it least.
Think New Mexico Executive Director Fred Nathan said Tuesday that his organization has found enough Democrats stating on the record that they are against reimposing the food tax that the proposal should be dead on arrival in Santa Fe.
"We're confident that it would be extremely difficult for the Greater Albuquerque Chamber of Commerce to reimpose the food tax," Nathan said.
House Speaker Ben Lujan, D-Santa Fe, told KOAT-TV this week that House Democrats would not be pursuing a food tax as part of their tax increase proposals in the Legislature.
Cole told Richardson on Tuesday, "The repeal of the food tax hasn't done the good job you hoped for." Citing the chamber proposal to give money from restoration of the tax directly to hungry people in New Mexico, she said, "To help the hungry, let's do it in an effective way."
Richardson called Cole's proposal for more direct funding "interesting," and said it was worth taking a look at in the Legislature.
Nathan said his group's estimates show a return of the food tax would cost a family of four $460 annually.
A junk food cost would be better received by organizations that oppose the food tax, Nathan said.
"We understand the need to make sacrifices and while we would prefer not to tax any food, we could see the need to tax junk food as an alternative and we would support that," he said.
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