House, Senate package seeks to recapture corporate tax capacity; House adds 1% public‑employee raise
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Summary
Lawmakers approved a multi‑part tax package that decouples New Mexico from parts of a recent federal corporate tax change, and earmarks revenue for a set of targeted incentives. The House Taxation and Revenue Committee used part of its capacity to restore a 1% pay increase for public employees that the Senate had removed; the package drew extensive debate over economic and local fiscal impacts.
The legislature approved a tax package that unlinks New Mexico from several federal corporate tax changes and uses the regained capacity to fund incentives in health care, housing, and local journalism, alongside a House amendment to restore a 1% salary increase for public employees.
The Senator‑sponsored vehicle (SB151) seeks to "decouple" New Mexico from costliest federal provisions — including first‑year bonus depreciation and expanded interest deductions — that reduced state corporate income tax receipts after a recent federal change. Committee leaders argued the decoupling is a standard state response to protect local revenue and preserve fiscal capacity for state priorities. "This is not a new tax, nor is this a tax increase," the package chair said on the floor when introducing the measure.
Senate sections would create temporary refundable credits for local news wages and printing, a GRT deduction for materials used on qualifying affordable multifamily construction, and a physician personal‑income tax credit intended to recruit providers. The House amendments reserved capacity to fund a 1% compensation increase for state and public‑education employees and shifted some effective dates so House and Senate provisions roll out on different timetables.
Supporters said the package preserves funds for people, health care capacity, housing and workforce development. Critics said the decoupling effectively raises corporate tax bills and could weaken New Mexico’s competitiveness, especially for companies weighing multi‑state investment decisions. The committee sponsor responded that many states have used selective decoupling and that New Mexico is following established practice.
Lawmakers also discussed guardrails for GRT deductions and concerns about local governments’ GRT base; the House removed one GRT deduction after local‑government objections. SB151 passed the House on final passage with recorded votes after floor amendments (vote tally reported on floor).