New Mexico’s Budget Crisis: “It’s No Laughing Matter” (RADIO SPOT)

With the prospect of a special session of the legislature fast approaching to address a looming budget crisis, the Center for Civic Policy is running this radio ad in selected areas of the state which offers our take on the issue and calls upon constituents to take action:

A thirty-second radio spot can hardly do justice to this fiscal train wreck. A bit of context is in order.

The State of New Mexico faces a serious budget deficit as the result of a shortfall in revenues. Revenue projections made back in January were overly optimistic, it seems. It now appears certain that Governor Martinez soon will call a special session of the legislature to fix a growing budget crisis.

The Governor’s answer is a 5 percent across the board cut in funding for state agencies. New revenues are off the table, she says.

To call this approach unwise would be an understatement. How about unconscionable.

Consider these facts about the quagmire in which New Mexico finds itself:

  • 49th in child poverty
  • K-12 funding is nearly 11% less per student than pre-2008 recession levels
  • 7,000 fewer children fewer children receive child care assistance than in 2010
  • Medicaid was already underfunded this year by $86 million, causing cuts of over $400 million in health care services when lost federal matching dollars are included.
  • Low- and middle-income New Mexicans pay twice the rate in state and local taxes as the richest 1 percent.

We could go on and on.

Low oil prices are cited as the cause of the crisis. But overlooked in the midst of all the hand-wringing, are the horribly irresponsible tax policies enacted in recent years.

The cold hard truth of the matter is this: The Governor is determined to protect her prized corporate tax giveaways by making New Mexico’s working families pay for them.

In 2013 Governor Martinez and the legislature gave huge tax cuts and tax breaks to large corporations, many of them out-of-state. These so-called “business incentives” were supposed to cause an explosion of job creation.

Well, it hasn’t worked. They just took the money and ran.

Today New Mexico has the 3rd highest jobless rate in the nation.

It stands to reason that our continuing underinvestment in education and healthcare is making New Mexico a less than desirable place for companies that are looking for a place to relocate.

A better answer is for legislators to say “no” to more cuts. It’s time to make corporations and the well-connected pay their fair share.

 

Tik Tok… not just a Ke$ha song! Clock is ticking on Governor’s decision whether to close corporate tax loophole (VIDEO)

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:

Phone: 505-476-2200

Email: http://www.governor.state.nm.us/Contact_the_Governor.aspx

 

It’s Alive: Bill to close out-of-state corporate tax loophole clears first committee

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.

Senate floor action features criticism of Governor’s messages and the Albuquerque Journal’s coverage

By Matthew Reichbach

Senate President Pro Tem Tim Jennings speaking on the floor of the Senate. Photo 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.

State of the State: Governor lays out agenda

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.

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