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No special session on tax overhaul

SANTA FE – It doesn’t look like state lawmakers will take on overhauling New Mexico’s tax code in a special session this year.

An international company hired to study the state tax base expects to issue its final report in December, the month before the Legislature’s regular 30-day session begins.

Supporters of revising New Mexico’s tax system had hoped the study would be completed in the fall, with the possibility of a special session to take action.

But the new timeline is included in a $400,000 contract approved last week with Ernst & Young, one of the largest professional services firms in the world.

In June, a bipartisan council of legislative leaders authorized hiring a company to study the tax code – part of an effort to give the Legislature better estimates on how revising the tax system would affect revenue.

Ernst & Young is under contract to develop a model that will allow legislators to analyze the effects of changes to the rates or structure of New Mexico’s tax system. The focus is on gross receipts and income taxes, both personal and corporate.

House Speaker Brian Egolf, D-Santa Fe, said the hiring of Ernst & Young went through the typical competitive procurement process – something he and legislators aren’t involved in.

But he said that from now to December seems like a reasonable amount of time to develop a computer model that lawmakers could use for years to help evaluate fiscal policy.

“It’s important to get it right,” Egolf said. “We’re looking to make the tax code fair and work better for everyone.”

Republican Gov. Susana Martinez has pushed for quicker action to overhaul the tax system. The proposals she backed died earlier this year in the regular and special sessions of the Legislature.

“Lawmakers spent months studying tax reform before the last session, yet when it came to act, all they could do is propose a study,” Martinez press secretary Joseph Cueto said in a written statement. “Sadly, this is more of what we’ve come to expect from Santa Fe politicians.”

Rep. Jason Harper, a Rio Rancho Republican who has led House efforts to revamp the tax system, said he is “disappointed by this delay.”

“What it means is New Mexican businesses and families are going to suffer even longer now under our broken code,” he said.

Senate Finance Committee Chairman John Arthur Smith, D-Deming, said the state’s tight budget – after a crisis that exhausted cash reserves – makes it especially important for lawmakers to have good information. In the past, he said, state officials have had trouble forecasting the effects of tax legislation.

“We don’t have a lot of room for error,” he said.