SANTA FE — With New Mexico facing high gas prices but awash in oil-fueled revenue, state lawmakers embraced direct financial relief for residents during a single-day special session this week.
The $500 tax rebates spread out over two checks — married couples filing jointly will get a total of $1,000 — that were approved decisively in both the House and Senate represent a policy shift for many lawmakers who had previously expressed skepticism about such an action.
Rep. Christine Chandler, D-Los Alamos, who was a key architect of the new round of rebates, acknowledged Wednesday her stance on rebates had shifted since the 30-day legislative session that ended in February.
At the time, she said tax rebates would not be an effective spending measure and could exacerbate inflation issues.
“In January and February, we were looking at long-term relief for New Mexicans,” Chandler told the Journal, referring to a tax package that included a reduction in the state’s gross receipts tax rate and exempting Social Security benefits from taxation for many retired state residents.
In contrast, the new round of rebates that would cost the state an estimated $677 million — plus an additional $20 million for non-tax filers who apply for payments — represent a short-term boost for state residents struggling with rising prices for gas, groceries and other goods, Chandler said.
“This is intended to address a specific situation,” she added. “I’d like to think it’s not going to be a common thing, frankly.”
Unlike other states like Alaska, New Mexico does not routinely provide tax rebates or dividends to its residents in cash-flush years and at least one previous round of rebates had to be scaled back due to revenue volatility.
That occurred in 2008, when tax rebates proposed by then-Gov. Bill Richardson in a special session were trimmed to $50 per single taxpayer amid an economic downturn.
For the new round of rebates, Chandler said a group of legislators first studied suspending the state’s 17 cent-per gallon gas tax, but ultimately decided such a move would not have provided sufficient financial relief.
Meanwhile, a spokeswoman for Gov. Michelle Lujan Grisham said discussions with legislative leaders led to higher rebate amounts than were initially floated.
The Democratic governor, who in 2019 questioned whether rebates would help grow New Mexico’s economy, has until April 25 to act on the tax rebate measure passed this week by legislators. She said in a Wednesday statement the new round of rebates would build on already-approved financial relief and would, as a result, mean up to $1,500 in direct aid for roughly 1.1 million New Mexico residents.
“I look forward to signing this legislation and getting these funds into the pockets of New Mexicans,” Lujan Grisham said.
Under the proposed rebates, checks for half the total amount would go out by the end of June, and the remainder would be sent in August. Tax filers would get the money automatically and no income limits would be imposed.
The new round of rebates would be in addition to tax rebates of $250 for New Mexicans who reported making less than $75,000 last year that were ratified during this year’s 30-day legislative session as part of a broad tax package.
Sen. William Sharer, R-Farmington, who pushed for even larger rebates during the regular session, said during the single-day special session held Tuesday he views the financial relief as more of a refund than a rebate.
“This isn’t a gift from anybody, the way I see it,” Sharer said during a Senate committee hearing. “This is taxpayer money that was simply more than we needed.”
But not all Republicans were in favor of the rebate bill.
The state GOP released a statement blasting the measure as a “political stunt,” despite that 21 of the 35 legislative Republicans — both senators and representatives — who were present voted in favor of the rebate legislation.
“These rebates are another manipulative move by the Governor and amount to bribery for votes,” said Kim Skaggs, the executive director of the Republican Party of New Mexico.
Even after the rebate checks go out, New Mexico will still have estimated cash reserves of more than $2.3 billion for the budget year that starts in July, as increased oil production and an uptick in consumer activity have propelled state revenue levels to record-high levels.