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Legislature weighs tax reforms

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SANTA FE, N.M. (AP) — State legislators on Wednesday pushed forward with tax reform efforts aimed at reducing state government’s dependence on a volatile oil and natural gas sector and providing steady funding for road maintenance, public schools and teacher pay increases.

The legislation seeks to increase annual state revenues by about $100 million at the same time it would shrink reliance on a pillar of the state tax code — the gross receipts tax on sales and business services. It also would increase some state personal income tax rates and the per-gallon tax on gasoline.

Rep. Jim Trujillo, the bill’s Democratic sponsor and chairman of the lead House taxation committee, said tax code changes are necessary to cover proposed new educational spending.

“The executive has offered to give teachers a 6 percent pay increase,” he said. “We support teachers, but it’s recurring expenses forever. So if we have a slow-down in the economy, where are we going to get the money to honor those commitments?”

Gov. Michelle Lujan Grisham has proposed a $500 million increase to annual state spending on public education. The state is forecasting a $1.1 billion budget surplus for the coming fiscal year because of surging oil production.

The state’s school district and charter schools rely almost entirely on state general fund spending and investment returns.

The proposed gross receipts tax reduction of 0.5 percent would trim annual state government income by an estimated $364 million annually, said Jon Clark, staff economist for the legislative finance committee.

To replace that money, Democratic lawmakers have proposed increasing the gasoline sales tax by 10 cents a gallon to 27 cents.

Personal income tax rates, currently capped at 4.9 percent, would increase for single filers who over $23,500.

The rate would increase to 5.5 percent for individuals earning between $50,000 and $100,000, and joint filers earning between $75,000 and $150,000, according to a fiscal analysis published by the Legislature.

The top personal income tax rate of 6.5 percent would be reserved for individuals making at least $200,000, or families earning at least $300,000.

The bill seeks to rescind about 30 categories of special tax breaks, while increasing state revenues from internet retailers, vehicle sales and nonprofit and government hospitals.

Fees on sales of new and used vehicles would increase from 3 percent to roughly 4.6 percent.

Republican minority whip Rod Montoya of Farmington characterized the proposal as a major tax increase on middle-class residents.

“If we’re going to increase that over here, the gross receipts tax needs to drop dramatically,” he said. “If the gross receipts tax could drop 1.5 percent or 2 percent that makes a difference for the poor.”

No immediate action was taken on the House tax reform package.

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