SANTA FE — A bundle of tax breaks approved by New Mexico lawmakers in a Monday special session does not have the same price tag as a high-profile 2013 tax package, but it could still pack an economic punch.
This year’s tax package, which is expected to be signed into law by Gov. Susana Martinez in the coming days, would renew and expand roughly a half-dozen tax incentives already on the state’s books and create at least two new tax breaks.
Its provisions include keeping alive a tax deduction — of up to 25 percent — on out-of-pocket medical expenses that as many as 300,000 New Mexicans have used in past years.
The other pieces of the tax package legislation are:
— Expanding and extending a tax credit for investments in start-up companies.
— Allowing companies with corporate headquarters in New Mexico to use a “single sales factor” to calculate their state corporate income taxes.
— Creating a tax deduction for contractors to sell certain high-tech goods or services to the U.S. Department of Defense.
— Pushing back certain tax filing dates for taxpayers who file electronic returns.
Business leaders praised the action.
“None of the tax incentives passed by the Legislature today are a silver bullet , but all of them send exactly the right message about being business friendly at a time when we need it the most,” said Terri Cole, president and CEO of the Greater Albuquerque Chamber of Commerce.
Cole singled out provisions to help manufacturing in rural areas and contractors in directed energy and satellite-related research, and others that she said would strengthen investment opportunities for smaller companies.
Jason Espinoza, the new president of the Association of Commerce and Industry, said the package fixed some “significant problems” with the state’s tax code.
“For example, one piece of the bill that ACI crafted was a proposal to stop penalizing headquarters operations for hiring more New Mexicans. The result of the fix—which passed today—is that these employers will now be incentivized to hire more New Mexicans, instead of having one more reason to take their jobs elsewhere,” he said. “Solutions like this are straightforward and commonsense, but they have a big impact for New Mexicans who need work.”
In the House, Rep. Matthew McQueen, D-Santa Fe, attempted to tack a solar tax credit provision onto the tax package, but the amendment attempt was thwarted on a party-line vote.
Legislation that would have extended the existing solar tax credit through 2019 was pocket vetoed in April by the governor, prompting the attempt to revive it.
In all, the tax package is expected to cost the state between $6.5 million and $11.5 million in foregone revenue once its fully phased in, Finance and Administration Secretary Tom Clifford told members of a House committee Monday.
Several legislators expressed concern about the relative uncertainty of the tax package’s fiscal impact, but the measure passed both the House and Senate by decisive margins.
It was approved 60-2 in the House, with Reps. Christine Trujillo and Patricia Roybal-Caballero, both Albuquerque Democrats, casting the two lone “no” votes.”
The Senate vote was 31-11.
In a news conference held after the special session ended, Martinez indicated she will sign the tax package and said it would bolster the state’s job-creation efforts.
“We have seven different tax credits (in the package) that show the rest of the country and the world that we’re open for business,” the Republican governor said.