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Tuesday, August 25, 2009

Sen. Linda Lopez Guest Blog: Return to Pre-2004 Tax Rates to Fix Budget Shortfall

Linda Lopez-1This is a guest blog by Linda Lopez, a New Mexico State Senator who has represented the Southwest Mesa and the South Valley for 13 years. Senator Lopez is an Albuquerque native and a single mom.

A lot of attention has being given lately to the growing budget shortfall our state is facing – and rightly so. If not addressed, the shortfall can reduce state services which will hurt our economy and our people.

As the estimated figure climbs day by day, media pundits offer advice on what to do about the nearly half a billion dollars in projected shortfall. That advice seems to be centered around cutting badly needed services for our neediest residents. I don’t find those kinds of options acceptable!

Here’s some advice I’ve been giving since 2003: New Mexico should never have given a tax break to its wealthiest residents. It was a mistake and we’re paying for it now more than ever.

Back in 2003, the New Mexico legislature changed the tax code to dramatically lower the tax rate for our state’s highest income earners. The premise for this tax “reform” was to attract executives that would bring businesses with good paying jobs to the state. As far as I can tell, we haven’t seen any benefit to this tax break. What we have seen instead is the loss of nearly half a billion dollars in revenues to the state’s general fund every year.

I find it to be a sad coincidence that budget shortfall estimates are quickly reaching the half billion-dollar mark. This is especially sad because of all the services we will have to sacrifice like child care, long term care services, education, and Medicaid (which brings with it lots of Federal matching funds) to make up for the shortfall.

Last session, Legislative Council Services estimated that the 2009 edition of my bill to return taxes to pre-2004 rates (SB 508) would have created an additional $224,460,000 in revenues for fiscal year ‘10 and $459,320,000 for fiscal year ’11. Imagine if my bill had passed two sessions ago, or three – or better yet, imagine how much better we would be now if New Mexico had never given those tax breaks in the first place!

Next legislative session I plan to once again introduce a bill that will roll back taxes to pre-2004 levels. Please encourage your legislators to support this bill. Services you feel are important hang in the balance.

This is a guest blog by State Senator Linda Lopez. If you'd like to submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link on the upper left-hand corner of the page.

August 25, 2009 at 10:48 PM in Children and Families, Economy, Populism, Education, Government, Guest Blogger, Healthcare, NM Legislature Special Session 2009, Poverty | Permalink


I agree with Sen. Lopez on this issue. Now, how about dropping support for those revenue-killing TIDDs, Senator?

Posted by: Proud Democrat | Aug 26, 2009 10:05:15 AM

I remember the family sitting around wondering why Richardson, a Democrat would emulate George Bush.

Posted by: qofdisks | Aug 26, 2009 12:53:04 PM

Thank you Senator Lopez for having offered that bill before. I had hoped to hear it in committee in the last session but I do not remember it being heard in any committees. Please work it up more. This is a great thing to do.

Terry Riley

Posted by: Terry Riley | Aug 26, 2009 2:00:12 PM

Well said, Sen. Lopez! Thank you!

To qofdisks... at least the Bush tax cuts for the very wealthy will expire. Richardson's tax cuts for the very wealthy do not expire and will only go away when enough legislators have the courage to vote to repeal them.

Posted by: Bill Jordan | Aug 26, 2009 2:53:44 PM

I'm with Proud Dem. Let's stick it to few wealthy who actually pay taxes in this state so we can subsidize fat cat SunCal millionaires who file in California.

Posted by: Hunter | Aug 26, 2009 3:54:03 PM

SB 508 [2009 regular session] "would have created an additional $224,460,000 in revenues for fiscal year ‘10 and $459,320,000 for fiscal year ’11." Those estimates are probably on the high side given the current economic climate, as even the rich have taken a hit in their investment income.

Another source of income would be, as I have posted before, a 20% salary cut for all public officials with annual salaries over $50,000 (with $50k the lower limit on the reduced salary).

The reason this won't happen is because of the culture of corruption mentioned by Ched MacQuigg, whose root cause, IMHO, is the lack of campaign finance reform.

Senator Eric Griego introduced a public campaign financing bill (SB 165) in the 2009 regular session, but it was killed in Senator Lopez' committee (Senate Rules committee). The bill sure needed work, but the committee could have encouraged the freshman senator by working with him on a committee substitute.

Another effect of the culture of corruption is that the legislators that voted against the bill in the Senate committee are not even on record on that vote. They do not require themselves to file an online report after they kill a bill.

Posted by: Ellen Wedum | Aug 27, 2009 5:17:25 AM

Hey Ellen, why should public officials pay the price for the fact that our allegedly Democratic governor won't make the wealthy and corporations pay their fair share? If you want corrupt and incompetent people serving in public office, cut the pay for those positions.

I agree with Sen. Lopez's plan but I do wonder how it fits in with her support of Sun Cal tidds and her refusal to let so many ethics reform proposals out of her committee.

Posted by: JW | Aug 27, 2009 8:33:22 AM

“Perhaps some tax cuts have outlived their usefulness.”

Gov. Richardson has responded to AFT New Mexico’s petition drive to roll back tax cuts for richest New Mexicans, close tax loopholes for big out-of-state corporations, and use revenues to restore $30 lawmakers cut from the 2009-2010 public school student funding value and stop education cuts.

The governor told ABQ Journal, “Perhaps some of the tax cuts have outlived their usefulness.”

Tax cuts passed by lawmakers in 2003 have outlived their usefulness. Lawmakers must roll back tax cuts and education cuts when they meet in October.

Tax cuts which have “outlived their usefulness”

1. TAX CUTS FOR RICHEST – New Mexicans with incomes of $295,000 or more get $13,227 in tax cuts. New Mexicans with incomes less than $16,000, or incomes of $16,000 to $29,000 get nothing but education cuts.

Rolling back tax cuts for the richest will generate $450 million for public schools.

2. TAX LOOPHOLES FOR CORPORATIONS Big out-of-state corporations doing business in New Mexico are allowed to report their profits in states where there are no corporate taxes on profits.

Requiring corporations to pay taxes on profits earned in New Mexico will generate $60-$80 million for public schools.

3. TAX CUTS ON CAPITAL GAINS – New Mexicans owning stocks do not pay taxes on the total increase in the value of stocks. They pay taxes on one-half of the increase in the value of stocks. 76 percent of tax cuts on capital gains go to New Mexicans who earn $200,000 or more a year.

Rolling back capital gains tax cuts will generate $51 million for public schools.

What can you do to persuade your state senator and representative to roll back tax cuts and close corporate tax loopholes?

What can you do to persuade your lawmakers to use additional revenues to restore $30 they cut from the student funding value and stop education cuts?

SIGN THE AFT NM PETITION ! Take your PETITION home. Ask family, friends and neighbors to sign it.

More info: AFT New Mexico 800-224-3270

Posted by: John Ingram | Aug 28, 2009 4:25:23 PM

John: I will contact AFT NM and get going on promoting this. Excellent suggestion.

Posted by: barb | Aug 28, 2009 6:52:38 PM