What do Tila Tequila and the Insane Clown Posse have to do with New Mexico’s lagging job growth? Sarah Kennedy will explain. As usual.
The battle to close the tax loophole for out-of-state corporations has been raging for a long time. But in the 2012 legislative session, something quite extraordinary happened.
After all of the years of organizing at the grassroots — and obstruction and disappointment in the corridors and committee rooms of the Roundhouse — a scaled-down version of this overdue tax reform (technically called “combined reporting”) actually passed both houses of the legislature.
Sadly, the legislative victory of the “Corporate Fair Tax Act” (SB9) was short-lived for it subsequently fell victim to Governor Susana Martinez’s veto pen.
Thus, the battle is sure to be resumed at the next legislative session.
In anticipation of this upcoming next round, the Center for Civic Policy (CCP) and the Southwest Organizing Project (SWOP) collaborated in sending out post-session mailers designed to educate those members of the public who reside in legislative districts represented by lawmakers who had opposed SB9. The mailers were a follow-up to pre-session mailers addressing the same issue.
One of those legislators was Senator Phil Griego, a long-time opponent of combined reporting by out-of-state corporations — and Chairman of the critical Corporations and Transportation Committee.
Now, according to a recent story in the Albuquerque Journal, Senator Griego has reservations about this educational program.
But if civic engagement is anything, it is about dialogue. And that’s what Clearly New Mexico’s Sarah Kennedy set out to do in this video. She called Senator Griego. Here’s what happened:
Sarah will be keeping us posted as this dialogue develops.
A postscript to this story:
It bears repeating. An essential component of the missions of the two organizations, CCP and SWOP, has been to educate and engage the public — and still further, to encourage this informed citizenry to engage in an accountability dialogue with their elected officials on those issues that impact their communities.
To learn more about the civic engagement by nonprofit organizations, here’s a useful commentary on Haussamen’s blog that you’ll surely want to read.
Also we recommend this excellent NMTelegram.com post on the Governor’s veto and the reaction of New Mexico’s small business community to it.
Will she or won’t she? That IS the question.
Will Governor Susana Martinez do the right thing and and sign Senate Bill 9 into law, closing the tax loophole for Big Box out-of-state retailers and give New Mexico businesses a fair shake in the bargain? Or… (shudder), will she veto the bill? (See “Countdown to Decision“.)
As Sarah Kennedy explains, time is running out!
To contact the Governor’s office:
By Matthew Reichbach
A combined reporting bill that would close the loophole that allows multi-state corporations to avoid paying income tax on profits created in New Mexico, passed a key Senate committee Wednesday night, the first hurdle in its effort to become law.
After over two hours of debate, the Senate Corporations and Transportation Committee passed SB 9 on a 5-4 vote with no recommendation. Sen. Phil Griego (D-San Jose) voted along with the Republicans on the panel.
Sen. Peter Wirth (D-Santa Fe) brought the law for the fourth straight year, this time with some tweaks. In addition to calling for combined reporting, Wirth’s law would reduce the top corporate income tax rate to 7.0 percent from 7.6 percent, a difference from the past years to entice votes that otherwise have gone against the bill.
Wirth and supporters of the bill say the bill would level the playing field for small businesses in New Mexico that do not have the option of paying corporate taxes in another state. Those who oppose the bill say it would make New Mexico less competitive and stop businesses from coming to New Mexico to do business.
“These small businesses are put in a position of competing against multistate conglomerates,” Wirth said, saying the large corporations can expense profits to other states instead of paying the New Mexico taxes.
In an attempt to make the legislation hit a more narrow area of businesses, Griego proposed an amendment that would only require retail outlets of more than 30,000 square feet to comply with combined reporting. Griego called it his “big box amendment.” It was aimed squarely at corporations like Walmart and Target while attempting to exempt other businesses like Intel Corporation. But it would also have exempted large fast food chains.
Wirth called the bill a sort of “reverse carveout” which “carves everybody out except big box stores.”
The amendment ultimately failed.
A common complaint of those who were opposing the bill, who were all lobbyists for multistate corporations, is that this bill would be favoring one class of businesses (locally owned businesses) over another class of businesses (multi-state corporations).
“I’m not the one pitting businesses against businesses,” Wirth told the committee. “We already do that in our tax code.” Wirth said this bill would level the playing field.
The bill now heads to the Senate Finance Committee where it probably faces a similarly tough debate. Nevertheless, clearing Senate Corporations was a notable achievement, given the committee’s long-standing and well-deserved reputation as the home field for corporate lobbyists.
Odds and Ends
- One problem is that no one quite knows just how much the tax loopholes and carveouts cost the state in lost revenue. A bill requiring a tax expenditure budget, which would fully account for the effects of all the tax breaks, was vetoed last year — something that Sen. Tim Keller (D-Albuquerque) called a preemptive strike against tax reform. Gov. Susana Martinez will release her own tax expenditure budget, but, due to the veto, the next governor will not be required by statute to follow her example. Former Gov. Bill Richardson also vetoed a tax expenditure budget.
- Former Sen. Kent Cravens came back to the New Mexico legislature, this time as a lobbyist for the New Mexico Oil and Gas Association. He objected to the term “loophole” to describe businesses paying taxes in other states on the revenue created in New Mexico, saying it “demonized” businesses for filing in an appropriate fashion. Cravens probably also objects to the terminology of the “revolving door” — a reference to the practice of former legislators immediately returning to the Roundhouse as corporate lobbyists.
- Sen. George Munoz (D-Gallup) said that the bill would ultimately make corporations layoff workers to keep their profits up.
- Though the room cleared out because of the late start to the hearing (SB 9 was not heard until after 6:00), the room still had many supporters of the legislation. When they applauded after public comment, committee chair Griego seemed visibly upset and instructed the audience that they were not in a city council or county commission hearing and to not burst into applause. Before coming to the state Senate in 1996, Griego served on the Santa Fe City Council.
- Supporters of the bill asked questions of Frank Katz, the former General Counsel at the New Mexico Taxation & Revenue Department. Opponents of the bill tended to direct their questions to Dick Minzner, a lobbyist who has long opposed combined reporting on behalf of his clients.
By Matthew Reichbach
Two state Senators stood on the Senate floor today and leveled criticism at the Governor’s office for its handling messages to the legislature, and at the Albuquerque Journal for a news story about the controversy. The issue of Governor’s messages has a bearing on on which bills can be ruled as germane for consideration during the session.
In a 30-day session like the current one, the only bills allowed to be considered and acted upon are those that pertain to budget matters — or those that are related to any subject contained in a Governor’s message. Some lawmakers have said that the messages from Martinez are overly broad and would create a logjam of legislation during the 30-day session.
Martinez was criticized last year for adding a large number of subjects to the official call for September’s special session which some legislators, predominantly Democrats, said would distract from the constitutionally mandated task of redistricting — a complicated job that happens only once every ten years.
At issue in the Albuquerque Journal story was a quote from Scott Darnell, a spokesman for Martinez.
“Despite our efforts to be accommodating, they have expressed a desire to be more restrictive and … we will work with that, but members who are unhappy with their bill not being heard would need to speak with their leadership – and not the Governor’s Office,” Martinez spokesman Scott Darnell said.
Senate President Pro Tem Tim Jennings (D-Roswell) took exception to the quote, saying, “There were no errors on the part of the Senate or House. The messages were very broad.”
Jennings explained that the Senate would not ask the Governor to “pull back” her messages to the Senate and issue new, narrower messages, but instead keep the original messages in place and that future messages be made narrower in scope. Jennings explained that the Senate Committee on Committees had already ruled legislation germane based on the original messages, adding that it would be unfair now to pull that legislation back.
“Those messages had gone out and the cards had been played,” Jennings said.
Sen. Cisco McSorley (D-Albuquerque) criticized the Albuquerque Journal for its story, accusing it of bias.
McSorley said the Journal does not get both sides of the story. “They seem to reprint press releases from the Governor’s office and that they’re not really helping people of the state of New Mexico understand how their government functions and how the stakes are made.”
Of course, legislators complaining about the way the media writes a story or about the Governor’s actions is not unusual. However, it does provide an interesting interlude during the early days of the session when most of the action is dominated by routine minutiae like passing committee reports and expressing support for the Boys and Girl Club of New Mexico.
Odds and Ends
- The Santa Fe New Mexican reported that even some in the Republican Party were critical of the Governor’s messages.
- McSorley noted that the Albuquerque Journal does not pay gross receipts tax. This brings to mind a move in Oklahoma to place a sales tax on on the cost of newspapers to pay for bonuses for National Board Certified teachers.
- Over 200 bills have been introduced in the Senate so far this session — only a fraction of those will make it out of committee, let alone be passed along fro Martinez’s signature — or veto.
Sarah Kennedy has the answer:
By Matthew Reichbach
Gov. Susana Martinez used her annual State of the State address to announce her agenda for the 2012 regular session. The speech featured few, if any, surprises.
Martinez outlined her positions on education reform and pushed for tax breaks for businesses in an effort to avoid “pyramiding” of taxes on small businesses. (For a good analysis of this issue, see Winthrop Quigley’s piece in the Albuquerque Journal.)
Martinez called for teacher evaluations, which she said would help reward the best teachers in the state. Martinez called for teachers to assess children annually beginning in kindergarten and to tie teacher bonuses to the evaluations.
“The teacher who takes kids three grades behind and gets them up to grade-level has arguably accomplished more than the teacher who has a class full of over-achievers,” Martinez said. “That’s why I’m urging you to support a teacher evaluation system that will identify these great heroes in our schools and reward them accordingly.”
The governor also supports a bill that would end “social promotion” or allowing students to move on from the 3rd grade unless they reach certain benchmarks.
Martinez called for legislators to “close the revolving door that turns citizen legislators into special-interest lobbyists, where one day they’re serving the public and the next day, they’re using those connections to serve a special interest.”
Most recently, state Sen. Kent Cravens (R-Albuquerque) resigned his position to take a high-paying job with the New Mexico Oil and Gas Association. Other well-known lobbyists are former state legislators.
Courtesy of NMPolitics.net: Follow along with the bloggers at the Roundhouse as they cover Governor Martinez’s State of the State Address.
Governor Susana Martinez that is.
Talking about jobs, jobs, jobs. And where’s there’s talk, there’s… what exactly? More corporate tax breaks?
Sarah Kennedy wants to know.
If you hate hate (now there’s a turn of phrase for you!) as much as Sarah Kennedy does, you’ll want to watch her latest video in which she shares some disturbing emails. At the end she offers an impassioned plea to chill the over-heated rhetoric about immigrant drivers’ licenses.