Imposing tax on food among proposals before NM governor’s budget task force

Income tax surcharge under study by NM task force

SANTA FE, N.M. — Nearly three dozen tax increase proposals to help New Mexico cope with a budget shortfall are under consideration by a task force formed by Gov. Bill Richardson.

One proposal would impose the gross receipts tax on sales of groceries and most food staples. The tax was lifted in 2005. Another option is to impose a personal income tax surcharge on upper-income residents, such as joint filers earning $150,000 or more a year. Other possibilities include raising taxes on sales of liquor, cigarettes, cars and trucks, and levying the gross receipts tax on gasoline. Higher taxes on oil and gas production also are being examined.

“We only want to look at the tax programs that could raise meaningful revenues to help close the budget deficit gap,” Taxation and Revenue Secretary Rick Homans, chairman of the task force, said in an interview Tuesday.

The group meets Thursday in Albuquerque, with other sessions scheduled for Dec. 1 in Las Cruces, Dec. 10 in Farmington and Dec. 17 in Santa Fe.

A report will be submitted to the governor by Dec. 21. The group won’t recommend specific tax measures but will outline their pros and cons.

Lawmakers convene Jan. 19 for a 30-day session, facing two difficult tasks: finish plugging a $650 million revenue shortfall in the current budget year, then deal with an estimated $500 million gap in the next fiscal year. The state is at least $200 million short of resolving this year’s budget problems despite deficit reduction measures approved by lawmakers during a special session.

Richardson has said tax increases are inevitable in next year’s Legislature. More budget cuts also are expected.

“We’re all aware that tax proposals are going to be introduced and likely to be passed in the session and are likely to be part of the budget balancing package,” Homans said. “The governor wants to make sure that whatever tax increases may be part of that package that they’ve been given full consideration and analysis prior to the session.”

Proposals to raise income taxes could run into trouble with Richardson. A blog by the governor’s office last week said he “continues to have deep reservations about any changes to the personal-income and capital gains tax cuts as well as tax credits that have created thousands of jobs for New Mexicans in areas such as film and renewable energy.”

Nearly $400 million in personal income tax cuts were enacted in 2003 at Richardson’s urging. The governor contends the lower taxes are an economic development incentive to help attract businesses to New Mexico.