A trio of New Mexico House Republican leaders on Tuesday called on Gov. Michelle Lujan Grisham to convene lawmakers to eliminate the state’s personal income tax, which they said will provide more lasting economic relief to residents than the $250 rebate the governor recently proposed.
Lujan Grisham , in a June 27 op-ed in the Albuquerque Journal, said a one-time rebate to New Mexico taxpayers is necessary to offset the sharp increase in gas prices drivers have experienced since President Donald Trump launched a war withIran in February.
The resulting increase in the price-per-barrel of oil has resulted in a projected windfall of roughly $850 million into state coffers, according to recent estimates from the Legislative Finance Committee. But it has also cost households roughly $450, according to a Moody’s Analytics analysis report in late May.
According to the American Automobile Association, the average price per gallon of unleaded gasoline in New Mexico about $3.79 as of Tuesday. That’s lower than $4.08 last month but nearly a dollar more than the statewide average this time last year.
“When the state’s good fortune comes at a direct cost to the people who live here, the appropriate response is to share what we’ve collected,” the Democratic governor wrote in the newspaper.
But in a letter to the governor’s office Tuesday, state House Republican leaders Reps. Gail Armstrong (R-Magdalena), Rebecca Dow (R-Elephant Butte) and Alan Martinez (R-Rio Rancho), who said a better policy would be to eliminate the state’s personal income tax, a change they estimate would return more than $2 billion per year to New Mexicans.
“Repealing the state personal income tax will usher in a new period of economic growth and higher living standards that will undoubtedly expand hope for current and future generations of New Mexicans in being able to find good, high paying jobs,” the lawmakers wrote.
According to a Legislative Finance Committee database, the state has collected roughly $2.2 billion in personal income taxes this fiscal year, comprising roughly 16% of the state’s general fund budget. The state’s personal income tax rate for married joint-filers is $768 plus 5.7% of income above $24,000.
A spokesperson for the governor told Source NM in an emailed statement Tuesday that Lujan Grisham “appreciates” the Republicans’ support for her proposal to offset the cost of soaring gas prices.
But Communications Director Michael Coleman said the Republicans’ tax proposal would have “recurring and significant budget implications that demand comprehensive analysis and rigorous debate” better suited to the regular, 60-day session beginning in January than a special session.
Lujan Grisham, who is term limited, is entering the last six months of her final term in office. Next year’s session will feature a new governor.
The Republicans’ letter predicts that such a large proposed hit to the general fund will prompt opposition from Lujan Grisham and other Democrats concerned about major spending cuts to education, healthcare and other services.
But the Republicans argue the state has more than enough in reserves to offset the losses and that the Legislature could “lessen its appetite” for nonrecurring spending in future budget years.
“We also believe repealing this income tax is highly doable without any reduction in the recurring portion of the state budget, while at the same time providing all New Mexicans a more prosperous and productive future,” they wrote.
