A local state legislator is expressing concern about a last minute tax package approved in this year’s session. Corporations will benefit from tax cuts, but cities and counties may be forced to increase taxes in coming years because of an economic development package approved by the New Mexico Legislature. The Associated Press says…the tax proposals will cost the state about $56 million dollars in reduced revenue in 2017. Representative Jeff Steinborn says he supported an expansion of the state film tax credit and another measure to ensure what he describes as a more equitable tax for out of state corporations….but Steinborn says….the other tax cuts and changes could be very painful.
The measure gives cities and counties the ability to raise taxes to offset revenue the state plans to divert as a result of the elimination of the so-called “hold harmless” provision, which provided state money to offset the loss of GRT revenue when the state food tax was eliminated. Republican Gov. Susana Martinez said the tax bill was crucial for diversifying New Mexico's economy and bringing higher paying jobs to the state.
Speaking of jobs….measures passed in the session mean a continued decline for state workers. Legislators passed a one percent pay raise….but they also approved increased mandatory pension contributions phased in over varying time periods. Employees in the PERA state pension system will pay an additional 1.5 percent of their pay….and employees in the ERB state pension will pay another 2.8 percent. Even without those additional pension contributions, inflation is running above one percent….meaning an inflation adjusted earnings decline. Full disclosure: New Mexico State University participates in the mandatory state pension system.