by Stephanie Maez, Executive Director, Center for Civic Policy (Albuquerque Journal OpEd, March 29, 2013)
Shock and awe would be a fair description of the surreal feeling experienced by those who witnessed the waning moments of the 2013 legislative session. That’s when a multi-million dollar tax package suddenly materialized and, with no committee hearing, no debate and inaccurate information as to fiscal impact, roared through its final vote after time had expired.
For its long-term impacts on working families and New Mexico local governments, those final seconds will surely come to live in infamy.
According to a Legislative Finance Committee post session analysis, the bill slashes corporate taxes by at least $215 million over the next four years, while potentially increasing gross receipts taxes for all New Mexicans.
House Bill 641 originally started out as a humble measure with the purpose of making modest changes to the film production tax credit. However, the bill that returned to the House floor minutes before adjournment had become a Trojan horse. Even before this new “omnibus tax package” bill could be handed out to stunned lawmakers, House Minority Whip Nate Gentry (R-Albuquerque) made a motion to shut down debate. Leaving important questions unanswered.
In a major exception to protocol, Gov. Susana Martinez’s secretary of Finance, Tom Clifford, was handed the microphone with five minutes left on the clock and allowed to address legislators in the House. Addressing the bill’s five-year financial impact, he asserted, “the net impact of all of those factors rolled together is a net positive to the general fund in all years.” His word was all that lawmakers had to go on. But it was a lie.
Today the bill sits on the governor’s desk. In a triumphal post-session press conference, she vowed to sign it. Perhaps, it is time we examine what those legislators didn’t have the opportunity to — the fact that on behalf of the governor’s administration, Clifford’s last-minute description of the bill was a farce.
Released three days after the Legislature had gone home, the Fiscal Impact Report plainly states that the bill will reduce general fund revenue by $42 million in FY16, hemorrhaging to $59 million in FY17 and we expect further losses in FY18 after the cuts are fully phased in. And most egregiously, in order to mitigate the overall impact to our state budget, a big part of the losses were off-loaded to local governments.
Many local government officials are scrambling to understand how they will be impacted, since they were not consulted before the bill was passed. Farmington Mayor Tommy Roberts declared that local governments were the biggest casualties of the tax bill, and headlines in Santa Fe, Albuquerque and Las Cruces cried foul.
To pay for Martinez’s cherished corporate tax giveaways, the burden was passed on to local governments. And that in turn will mean either cuts in local fire and police services, or a hike in a tax on everyday New Mexicans — impacting family budgets.
Many legislators warily voted for the legislation because they heard that it included a provision to close a tax loophole that gives out-of-state big box retailers advantages over local businesses. But now it appears that corporate lobbyists succeeded in exempting major corporations including Wal-Mart.
That was just one of the misperceptions about the bill, but it brings us to the essence of the argument.
Trickle-down economics, such as corporate income tax giveaways, have failed our country and they’ve failed at the state level as well. States that are winning the race to the bottom in slashing corporate income taxes (i.e. Texas, Tennessee, and Florida) have actually been doing worse with regard to growing unemployment rates according to the Institute on Taxation and Economic Policy.
What happened at noon on March 16 will go down as one of the low points in New Mexico legislative history. In a shocking move lacking in transparency and accountability, corporations made out like bandits while New Mexico’s working families were left holding the bag.