The Governor of New Mexico vetoed parts of a tax package, including a reduction in most goods and services tax and an electric vehicle tax credit. However, a $500 tax rebate for married couples, an expanded child tax credit, and changes to the film incentive program were kept. The personal income tax changes for low-income residents were also vetoed.
Vetoed Tax Package
The governor expressed concern that the bill’s recurring annual cost of $1.1 billion by 2027 could lead to future spending cuts, saying that she preferred more gradual changes to the tax code. The vetoed tax credits for electric vehicles, geothermal development, and energy storage were criticized by the Sierra Club’s Rio Grande Chapter, which claimed that the proposals could have helped the state respond to climate change.
Senate Majority Leader Peter Wirth, D-Santa Fe, said that the Senate would not try to override the Governor’s veto of the tax package, despite some lawmakers and advocates being disappointed. Rep. Derrick Lente, D-Sandia Pueblo, expressed his disappointment that the tax package was not able to reduce taxes for local businesses, educators, veterans, and everyday New Mexicans or improve access to rural healthcare and reach climate goals.
According to the State Taxation and Revenue Department, by removing the majority of the tax adjustments from the law, the recurring cost will be reduced to $150 million in the fiscal year 2024.
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Record-High Spending Plan
In addition to the tax package, according to a report by ABQ Journal, the Governor signed a $9.6 billion budget plan for the upcoming year, which includes record-high state spending for the third consecutive year due to a revenue windfall. The budget includes provisions such as $100 million for a law enforcement recruitment fund, $100 million for two new conservation program funds, and $90 million to increase Medicaid provider reimbursement rates.
It also provides funding to give 6% pay raises to state employees and teachers, starting in July. However, before signing the spending plan, she vetoed nearly $21 million of it, as well as striking other budget wording that she claimed infringed on the executive branch’s power.
Lawmakers were able to approve the tax package and increase state spending thanks to a boost in consumer spending and a significant rise in oil production in the Permian Basin, which has made New Mexico the second-largest oil producer in the country, after Texas. This increase in revenue was the main driving force behind the government’s ability to make these decisions.
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