Likelihood of Higher Taxes Looms Large
By Paul J. Gessing
The tax hikes are coming fast and furious these days in the Land of (dis)Enchantment.
During the 2017 legislative session, numerous tax hike bills were considered. Several passed. Gov. Susana Martinez vetoed them, but with New Mexico’s budget facing an ongoing crisis, the likelihood of higher taxes – including a 10 cent/gallon gas tax hike – looms large.
A special session has been called for May 24 and Democrats who control the Legislature can again be counted on to push very hard for higher taxes.
Locally, the Bernalillo County Commission, simply because they could, adopted a 3/16th percent hike in the gross receipts tax that will take effect this summer. Once that tax hike is factored in, Albuquerque’s gross receipts tax will have risen more than 29 percent since just 2000.
Now, with a looming vote on an onerous mandatory paid sick leave this fall and with New Mexico suffering from a highest-in-the-nation unemployment rate, Councilor Isaac Benton is pushing for a brand new tax on local motorists – a 2-cent-a-gallon gas tax.
Theoretically, this latest tax hike is supposed to go to fund local infrastructure projects. A cynic might believe that this tax hike is designed to cover up for the boondoggle known as Albuquerque Rapid Transit. While Mayor Berry bears primary responsibility for this costly mistake, Councilor Benton and seven of the nine councilors (Peña and Lewis being the laudable exceptions) supported the project.
A 2 cent-a-gallon gas tax may not seem like a big deal, but Albuquerque residents should be aware and be in touch with their councilors and Mayor. Why?
- According to Frank Crociata, director of tax policy for the Taxation and Revenue Department, tax collection requires auditing and a collection policy, as well as an administrative appeals process.
In other words, administration and compliance costs will eat up a significant portion of the revenue generated.
- This tax will not be dedicated to road construction or needed river crossings, but to “rehabilitate transportation systems” including the despised Albuquerque Rapid Transit system and the City’s bus system;
- Like all gas taxes, this proposed gas tax is both “regressive” and falls most heavily on working class poor people. A 2012 report from the Brookings Institute stated, gas tax hikes “are especially harmful to lower- and moderate-income households” due in part to the fact that they drive older, less efficient vehicles.
We know that Albuquerque’s economy, nearly a decade on, has still not recovered from the 2008 economic crisis. The population is stagnant and there are fewer jobs than there were then. Raising taxes yet again is hardly going to improve the local economy.
Raising the gas tax may seem like a small price to pay for better roads, but what would really help is for the City of Albuquerque to push for statewide repeal of New Mexico’s “Davis-Bacon” prevailing wage law.
Bills have been introduced in the Legislature year after year to repeal this arbitrary wage mandate which increases the price tag of roads and schools by between 15 and 25 percent. Unfortunately, the City of Albuquerque’s lobbying team in the Legislature remains mum on the law’s negative impacts on taxpayers and motorists. If the City put its considerable political weight behind such a change, we could avoid unnecessary tax hikes and improve local infrastructure at the same time.
Perhaps the soda tax vote in Santa Fe represents a change in voter attitudes about higher taxes, but this will be an important test. City Council should be skeptical of another unnecessary cash-grab.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.