Good tax policy? Umm, not so much…
Media reports on the big tax bill (HB-641) that passed in the closing minutes of the 2013 legislative session noted that while there was little Senate debate and no House debate on the bill, the components of that tax bill had been previously debated in committee. This implies that the bill had actually been debated and found to be good tax policy. What these media accounts failed to report is that the members of the only committee that actually debated all of those components—the House Taxation and Revenue Committee—voted against the big tax bill 9-5. In other words, those who knew what was in the bill and had studied it clearly didn’t think it was good tax policy.
With the clock ticking toward the mandatory noon adjournment, legislators were asked to vote on the bill and its 35-page amendment, which stood to impact the state by hundreds of millions of dollars. With no written analysis of the bill in front of them, representatives were instead given a wildly incorrect verbal analysis by the governor’s tax expert, Tom Clifford, Secretary of the Department of Finance and Administration. Twice he said that the bill had a positive fiscal impact in every year, meaning that it would increase money available to the state for things like education. In fact, the bill loses almost $250 million in the first few years, money that will not be there to pay for education, health care, public safety, and other critical state services.
The first written analysis of the bill was released a few days after legislators went home. It showed that Secretary Clifford had grossly misrepresented the financial impact of the bill. There have been two revised reports on the bill since then and each one shows an even greater loss of revenue.
This isn’t the first time there was a ‘mistake’ in analyzing a tax bill. The governor’s tax experts made a $40 million-plus ‘mistake’ in last year’s tax bill and the fix for that ‘mistake’ was in this year’s bill. In fact, several of the provisions of this year’s big bill were fixes or tweaks to past tax bills.
And speaking of past tax bills… supporters of this tax bill, including the governor, assure us that new businesses will suddenly flock to the state and that will more than make up for this lost revenue. A past Governor said that about his big tax cut in 2003 and we’re still waiting for those jobs to appear.
With each new deeper review on the impact of this year’s tax bill, the more heartburn we have about it. Perhaps legislators will feel some of the same heartburn and have the courage to come back next year and fix this ‘mistake’ too.
Bill Jordan is NM Voices’ Senior Policy Advisor/Governmental Relations