Could New Mexico's revenue windfall mean an additional round of tax rebates for residents? - Albuquerque Journal

Could New Mexico’s revenue windfall mean an additional round of tax rebates for residents?

Copyright © 2022 Albuquerque Journal

SANTA FE – With New Mexico once again awash with revenue, Gov. Michelle Lujan Grisham will push for lawmakers to approve an additional round of tax rebates for state residents during the upcoming 60-day legislative session.

The specific size and scope of the rebates remain under negotiation with the session just over a month away, but a spokeswoman for the Democratic governor said Tuesday the rebates could be in the ballpark of $750 per taxpayer – or $1,500 per married couple filing jointly.

The cost of such a package could exceed $1 billion.

Governor Michelle Lujan Grisham

“The governor has been working for several months to urge the Legislature to support using a portion of the one-time funds to deliver another rebate to New Mexicans as they continue to experience high costs due to inflation,” Lujan Grisham spokeswoman Nora Meyers Sackett told the Journal.

Legislators already approved several rounds of rebates worth up to $1,500 per household this year, but new revenue estimates unveiled this week project revenue levels will continue to surge through the coming budget year – with roughly $3.6 billion in “new” money projected to be available – due to increased oil production and an uptick in consumer spending.

Top budget officials in Lujan Grisham’s administration urged lawmakers during a Monday committee hearing to use the windfall on one-time expenditures due to the risk of future revenue dips. The rebates could emerge as one of those targeted spending areas, along with rural health care, water projects and more.

“The record-high revenue projections present a unique opportunity to keep more money in New Mexicans’ pockets, and the governor will continue to push for an additional round of rebates as we near the legislative session,” Sackett said.

Lujan Grisham’s recent support for rebates represents a shift of sorts, as the governor in 2019 questioned whether rebates would help grow New Mexico’s economy.

During this year’s gubernatorial campaign, Lujan Grisham also criticized Republican Mark Ronchetti’s proposal to cut state income tax rates and provide annual rebate checks for state residents, saying those plans could lead to future budget cuts for New Mexico public schools.

However, the rebate package currently touted by the governor would still leave the state with ample money to spend in other areas – or to set aside for future years.

For instance, Rep. Christine Chandler, D-Los Alamos, the chairwoman of the House Taxation and Revenue Committee, said Tuesday there would still be funding left over after approving rebates to pay for changes to the state’s tax code.

She also said rebates do not provide lasting financial relief for New Mexicans, but are appealing from a practical standpoint because they do not encumber the state for future years.

“I think it’s a reasonable approach for dealing with the unprecedented revenue levels that we have,” Chandler told the Journal.

There are still ongoing discussions about the size of the rebates and whether they should be limited to New Mexicans below certain income levels, Chandler said, but she indicated there is general support among lawmakers for another round of rebates.

House Minority Whip Jason Harper, R-Rio Rancho, said Tuesday he would back an additional round of rebates, saying, “In principal, this is the taxpayers’ money and returning some of that to them is something I’m very supportive of.”

But he also said the state’s revenue situation should compel lawmakers to act on long-debated changes to the tax code, which could include reducing the gross receipts tax rate and exempting some business transactions from taxation in order to avoid a layering of taxes.

“This is an incredible opportunity to make some lasting change,” Harper told the Journal.

Despite recent wage and income growth, New Mexico has one of the nation’s lowest per capita income levels at $50,189 according to the U.S. Bureau of Economic Analysis.

In addition, the state’s labor participation rate is significantly below the national average at roughly 56%, meaning a significant swath of the state’s working-age population is not actively seeking employment.

While heated debates could loom during the upcoming session, Senate Minority Leader Greg Baca, R-Belen, said the proposed rebates mark a rare policy agreement between himself and the governor.

“Good governance starts with remembering that there is no such thing as extra money, only taxpayer money,” Baca said. “I believe those that earn that money are those best suited to spend it.”

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