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New Tax Report: NM State Budget Easy to Balance

from the New Mexico News Connection - A statewide news service for New Mexico
Santa Fe, NM – A new study says New Mexico could immediately raise over 10 billion dollars by inverting its tax structure; that is, taxing highest incomes at the current rates of the lowest earners – and vice versa. The report, “Flip It to Fix It: An Immediate, Fair Solution to State Budget Shortfalls,” comes from United for a Fair Economy.

As New Mexico lawmakers consider cuts to balance the state budget, a new study says there’s a simpler – and far less painful – way to turn deficits into surpluses. It suggests flipping state tax structures, so the wealthiest pay the rates that low-income wage earners are now paying – and vice versa. That would immediately wipe out New Mexico's 160 million budget shortfall for the new fiscal year, according to report author Karen Kraut, an analyst with United for a Fair Economy. She says today’s political culture has contributed to the misperception that the wealthy pay their fair share – if not more – in taxes. She thinks that’s because tax debates tend to center on the federal income tax, "Pretty much every other tax – especially taxes at the state and local level – hit the lower- and middle-income folks a lot harder than the wealthy."

Kraut says the top 20 percent of taxpayers in New Mexico pay 6.2 percent of their income in state and local taxes, whereas the lowest-income taxpayers pay 10.8 percent of their income. Reversing those figures, she says, would raise over 10 billion dollars for the state's coffers.

The report says it isn't just New Mexico that would benefit from progressive taxation. Inverting tax structures would bring states across the country 490 billion dollars in new revenues, according to Kraut, "Every single state in the nation has a tax system that is regressive, that taxes the lowest-income families at a greater share of their income than the most wealthy families."

According to Kraut wealthy people should not fear progressive taxation...because with greater fairness comes greater overall economic stability and growth, "When low- and middle-income people have more money to spend in the economy, they purchase things, and the economy gets revved up, and the people who own businesses – and the people who invest in the stock market – gain from those economy-enhancing activities."

Kraut says there’s been a redistribution of wealth over the past three decades because of increasingly regressive tax systems. That's one reason that top incomes have soared, while lower incomes have stagnated.

View the study at www.faireconomy.org
Richard Alan reporting, nmnc@newsservice.org

Legislature: Bill Would Give Public Louder Voice at PRC

from the New Mexico News Connection - A statewide news service for New Mexico
Santa Fe - Not all bills will survive the nearly-done legislative session. One stalled bill would give the public a greater voice before the Public Regulation Commission.

This year's legislative session is winding down, and while some bills introduced will go on to become law, many others have stalled. One bill, HB488, that has hit a wall would provide funds to reimburse non-profits and public intervenors that go up against big utilities like PNM in cases before the Public Regulation Commission over things like rate hikes, consumer rules or other issues.

One PRC commissioner, Jason Marks, says big utilities can spend over a million dollars on a case, often leaving groups that advocate for the environment, low-income people and other areas of public interest seriously out-gunned, "They come in with one attorney, maybe one or two witnesses, depending on which organization it is, and there's a real disparity there."

Marks says that the way the law works, customers end up footing the bill for the hefty utility company legal fees. Utilities have argued, and Marks acknowledges, that multiple public interest intervenors can go up against a utility, evening things out a bit, but at a recent hearing PNM admitted spending two million dollars on the current rate case. The bill is currently stalled in the House Business and Industry committee.

Representative Eleanor Chavez sponsored the bill. She says reimbursing public intervenors frees up funds for non-profits to use to serve people in other ways, not to mention pushing back against rate hikes, "Intervenors in the past have been successful, but it's been very costly for them and it can really drain a, for example, a non-profit organization that wants to be an intervenor. I think this really levels the playing field."
Eric Mack reporting, nmnc@newsservice.org

NM Better Choices Coalition Pushes Closing Tax Looopholes Over Cuts to State Services

from the New Mexico News Connection - A statewide news service for New Mexico
Santa Fe, NM – Members of the Better Choices New Mexico Coalition kick off their campaign tomorrow, Wednesday, to protect community services from state budget cuts. The Coalition says it favors a balanced approach to help cover the state’s projected budget shortfall, and that includes higher taxes.

New Mexico state lawmakers start their session today, January 18th, and face a budget deficit estimated as high as 450-million dollars. The Better Choices New Mexico Coalition is set to launch its “10 Ways in 10 Days” campaign Wednesday to prevent further cuts to vital state services like education, public safety and health care. Stephanie Maez-Gibson is  Communications Director for the Center for Civic Policy, one of the nearly 40 organization members of the Better Choices Coalition.  According to Maez-Gibson "Each day, one 'Way' will be sent out that will highlight how New Mexicans would be hurt by continued budget cuts, and it will also highlight potential revenue measures that could help address this revenue crisis."

New Governor Susana Martinez is proposing overall cuts to state spending of around three percent, and no tax increases. According to Maez-Gibson protecting education, often targeted for cuts, is one of the top priorities for the Better Choices New Mexico Coalition.  She says, "We encourage legislators to hold education harmless and to prevent any further cuts to the classrooms. The education budget is a good chunk of the state budget, and therefore it could potentially take a pretty big hit if a budget is passed that does include cuts to state government."

The Coalition favors increasing revenues by rolling back state income tax cuts for the wealthiest New Mexicans. Maez-Gibson says there’s also a proposal called Mandatory Combined Reporting, which she says will level the playing field for small businesses,  "Currently, New Mexico out-of-state corporations are not required to pay taxes on the profits that they earn in New Mexico."

The nearly 40 members of the Better Choices New Mexico Coalition include small businesses, faith, labor and nonprofit groups.

Doug Ramsey, nmnc@newsservice.org

Congress May Shrink COBRA - Could Mean Disaster for Some New Mexicans

from the New Mexico News Connection - A statewide news service for New Mexico
Albuquerque - A bill to extend fiscal relief for New Mexicans relying on programs like unemployment, Medicaid and COBRA failed to pass a procedural hurdle Wednesday. The bill is being revised for another try, but it could be leaner than before, and that could be bad news for low-income or unemployed New Mexicans. Comments from Ron Pollack, executive director of Families USA. Bill HR 4213 failed to pass a procedural vote in the Senate Wednesday, leaving many unemployed and low-income New Mexicans in limbo. Lawmakers will try again after revising the bill, which includes money for states for things like Medicaid, unemployment insurance and COBRA. COBRA helps people keep and pay for their health insurance after losing a job. Ron Pollack directs health care consumer group Families USA, and he fears that the COBRA subsidy might not make it into the final bill, "That's going to mean that people, when they lose their jobs, are probably going to lose their health care coverage."

Pollack says that's because without the subsidy, the average COBRA premium consumes more than 84 percent of the average unemployment check, and in 11 states it's actually larger than the average unemployment payment. In New Mexico, the average COBRA premium, after the subsidy, is 380 dollars a month. Without the subsidy, it's 1,086 dollars.

Pollack says opponents of the bill who want to see some of the spending reduced out of anxiety over the expanding national budget deficit are justified in their concerns, but stimulating the economy, creating jobs and taking care of those who have lost jobs should be the focus in a recession,"That's gotta be priority number one at this point. Now, once the economy improves, then we need to really emphasize getting the budget in order, but this is not a period to be skimping on what people need to survive."

If Congress fails to extend the fiscal relief bill, New Mexico could face a more than $200 million dollar state budget gap because Santa Fe lawmakers passed a budget relying on that much in extended federal relief. Without the federal funds, there could be cuts to services like emergency hospital services and personal care assistance for people with disabilities (according to the Center on Budget and Policy Priorities.)

Budget 'Balance' Message Heard in Special Session

ALBUQUERQUE-Better Choices New Mexico released a statement today in reaction to the state budget, which the governor signed today: "Better Choices NM has been working hard since the 2009 special session to convince lawmakers to take a balanced approach to the state's revenue shortfall. That message got through to lawmakers during the special session. Instead of relying entirely on spending cuts-which would have had dire consequences for working New Mexicans, some modest tax increases were passed. Legislators and the governor made some tough decisions in the face of extreme lobbying from well-moneyed special interests. 
 
Since its formation in the summer of 2009, Better Choices NM has provided lawmakers with information about potential revenue sources as well as advice from economists about the best way to deal with a recession. "The economists were all clear on this-tax increases targeted at those who can most afford them are the way to recover from a recession. Drastic spending cuts will only prolong it," said Stephanie Maez-Gibson, the facilitator of the Better Choices alliance.
 
Not all of the tax increases that were enacted are targeted toward those New Mexicans who earn the highest incomes, but some were. Repealing the deduction for state and local taxes from the state tax return, for example, will mostly affect those with higher incomes. "New Mexico was one of the few states that still allowed this deduction, so eliminating it made sense.  Also, this will make our tax system significantly more fair," said Maez-Gibson.
 
The organization also applauded the Legislature's increase of the cigarette tax. "This tax increase will discourage teenagers from taking up smoking," said Maez-Gibson. "This will save lives of New Mexicans in the long run."
 
Several other tax measures that the organization advocated-making out-of-state corporations pay tax on their New Mexico profits, and adding a surtax on very high incomes, for example-did not pass.
 
"Better Choices will continue to work for a tax system that is fair for working families, and that raises enough revenue to support necessary state programs in education, health care and public safety," said Maez-Gibson.

For more information visit http://betterchoicesnewmexico.com or email betterchoicesnm@gmail.com  
 
BCNM unites New Mexico's faith community, working families, small businesses and nonprofit social advocacy groups that believe it is harmful to scale back investments in education, health care, and public safety.
Better Choices New Mexico consists of: Abrazos Family Support Services, America Votes Education and Action Fund, American Federation of State, County and Municipal Employees, American Federation of Teachers NM, Center for Civic Policy, Community Action NM, Communications Workers of America, Families and Youth, Inc., Farm to Table, Hands Across Cultures, Health Action NM, International Association of FireFighters, League of Women Voters of NM, Lutheran Advocacy Ministry, National Education Association New Mexico, National Association of Social Workers New Mexico, NM Adult Education Association, NM Child Care and Education Association, NM Coalition Against Domestic Violence, NM Coalition to End Homelessness, NM Conference of Churches, NM Early Childhood Alliance, NM Progressive Action, New Mexico Solutions, NM Voices for Children, NM Youth Providers Alliance, Results-Santa Fe, Santa Fe Alliance, and SouthWest Organizing Project.

Another Item on the State Budget To-Do List: Pension Obligations

SANTA FE, N.M. - It's just one more thing for lawmakers in Santa Fe to consider as they get back to the business of making a New Mexico state budget in a special session set for Wednesday, but it's a biggie: Will the state be able to meet its obligations to pay pensions and benefits to public retirees as the ranks of the retired continue to balloon?

Sue Urahn is managing director for the Pew Center on the States, which released a report late last week looking at how each state government is doing in managing its pension and benefit obligations. She says New Mexico comes up somewhere in the middle of the pack, one of the states that isn't of serious concern, but still in need of improvement.

"What we have today is an entirely solvable problem. Modest reforms will have a significant long-term impact. If they wait, if they defer this problem, they will have an unmanageable crisis on their hands."

Urahn says it can be tempting for states to put off addressing pension and other obligations, especially during tough financial times, but that doesn't make the bill any smaller in the future, "It's sort of like a credit card; you can certainly put off your monthly payment, but that bill doesn't go away and it just gets bigger."

Many public employees in New Mexico haven't been happy with some of the reforms so far, including reducing take-home pay to fill in some of the gap. The Land of Enchantment's unfunded pension liability in 2008, $4.5 billion, was greater than the state's annual payroll.

Some good news: New Mexico was among the top 10 states in terms of the percentage of funding set aside for its long-term bill for retiree health care and other benefits besides pensions.

The report is available online at: downloads.pewceneronthe states.org

"Reality Check" Letters on Schools Circulating in the Roundhouse

New Mexico News Connection - A statewide news service for New Mexico
 
Santa Fe - Teachers in the Los Lunas school district had a letter-writing party recently. And now those letters - which detail the reality of the impacts budget cuts have had on New Mexico classrooms - are making the rounds in the Roundhouse as lawmakers finalize a new budget.

It's the last full day of the legislative session in Santa Fe and, as lawmakers haggle over how much money will make it into the budget for public education, a group of teachers from Los Lunas is sharing a "reality check." Dozens of letters from teachers in the district have been circulating around the Roundhouse. One of them was written by Melinda Reynolds, a kindergarten teacher at Sundance Elementary. She says recent funding cuts are already affecting students every day, "We only get one cartridge of ink for the whole year and we're limited on our copies; also we've had transportation cuts already, which has affected after-school tutoring."

While education avoided major cuts in this year's budget, the Senate version of the budget bill includes over 80 million fewer dollars for education than the House version -- and school districts statewide are already struggling with the hundreds of millions in cuts to state education funding made in previous sessions. Lawmakers continue to try to hash out a compromise bill to send to the governor before the session ends tomorrow at noon.

Reynolds reads from a letter written by a teacher who moved to New Mexico from Ohio and worries that students here may face the same consequences she saw after that state made significant cuts to education spending,  "Class sizes rose to over thirty students; all special pull-outs were cut. No new supplies were purchased and some schools were using textbooks that were drastically outdated, and there weren't even enough for all students."

Legislation Threatens Cuts to Education, Public Employees & Could Harm New Mexico's Future

from the New Mexico News Connection - A statewide news service for New Mexico

Santa Fe - A bill now moving through the Roundhouse would cut pay for teachers and other public employees for a second year in a row. SB 246 includes cuts that could leave serious scars, according to New Mexico educators and other public employees. The bill now would cut pay for public employees making over 20-thousand dollars a year.

Proponents say it's just another tough but necessary measure to balance the budget. But teachers like Rosemary Carrasco of Carlsbad say the budget is being balanced too heavily on the backs of vital services like education,  "Every year it's been one percent here, point-eight percent here whatever, one-point-five...they're saying 'well, you're barely taking a little hit,' but over the last five, six years it's going to end up being like 11 percent by the time it's all said and done with."

The bill passed out of the Senate Public Affairs Committee this week and on to the Finance Committee. It includes a one percent cut for employees making between 20 and 40-thousand, a one-point-75 percent cut for employees making between 40 and 65-thousand, and the cut for employees over 65-thousand would be whatever is needed to come up with a total of 72 million dollars in savings to the state.  Carrasco says the salary cuts are felt by students too. She says due to the budget cuts of recent years, many educators now buy some of their classroom supplies themselves, but many are now having a harder time finding the money,  "Up to 800-900 dollars a year, I mean, it comes out of their paycheck, and if they don't have the money they're just going to have to do without and the kids will suffer then."

Report: Corporations' Combined Reporting Complaints Ring "Hollow"

from the New Mexico News Connection - A statewide news service for New Mexico
 
Santa Fe, NM - The budget battle is on in Santa Fe, and many say combined reporting for corporations could be part of the answer. It's a tax reform some say would close a corporate tax loophole, while others warn it could lead to job losses. A new report finds the latter argument doesn't bear out in the West.
 
As legislators look for ways to solve the state's budget woes, closing a tax loophole for corporations that operate in New Mexico is one suggestion that's gaining popularity. A proposed tax reform called "combined reporting" would end the tax shelters that large, multi-state corporations use to avoid paying state income taxes. The companies argue that it could lead to a loss of New Mexico jobs - but a new report examined 78 multi-state corporations... and found that 71 of them already comply with combined reporting in at least one other state. (Or, they are a subsidiary of a corporation that has a facility in at least one combined reporting state.) Michael Mazerov with the Center on Budget and Policy Priorities is the report's author and he says, "Claims that combined reporting would drive corporations from New Mexico or discourage them from coming to the state are hollow."

Bills to implement combined reporting have been introduced in recent years without success, and the idea has come up again this year in Senate Bill 90, by Santa Fe Senator Peter Wirth. It is opposed by business groups ,including the Albuquerque Chamber of Commerce... but supported by a broad coalition, from children's welfare to social justice groups. Companies in the report include Boeing, Intel, Motorola, Target and Wells Fargo, among others.

Mazerov points out that combined reporting for New Mexico was recommended by the Governor's Blue Ribbon Commission in 2003... and that New Mexico is the only state west of the Rockies that doesn't require it,  "Why should anybody think that they're going to shun New Mexico as a place to do business if New Mexico adopts combined reporting, when they quite willingly do business in lots of other combined reporting states?"

Note: The report is available at http://www.cbpp.org/cms/index.cfm?fa=view&id=3056.

New Mexicans Are Smoking Less but Eating More & it's Showing

New Mexico News Connection - A statewide news service for New Mexico
New Mexicans Are Smoking Less but Eating More & it's Showing
Santa Fe - Smoking rates are down 20 percent and the results can be seen in fewer cancer deaths, but obesity rates are up 48 percent - wiping out health gains made by reducing tobacco use.

New Mexicans are like most Americans - smoking less over the last 15 years resulting in longer life expectancy and improved quality of life. But according to a recent study in the New England Journal of Medicine, those benefits could be wiped out by the growing obesity rate. Chuck Reed with the American Cancer Society says few people know the link between being overweight and getting cancer,  "One of the scary things that we found in this recent survey is that 50 percent of the people don't know that there is direct correlation between obesity and cancer."  Reed says research shows if all U.S. adults became nonsmokers of normal weight by 2020, life expectancy would shoot up 3.76 years.

Reed says quitting smoking is one of the most common New Year's resolutions to make, but if you are going to resolve to be healthy in the New Year, don't stop there,  "If you going quit smoking, which we encourage you to do, take it one step further and also maintain a healthy body weight, because that way, you're making positive lifestyle choices and you can live longer and you can enjoy your life better."

For tips on healthy eating, visit www.cancer.org/GreatAmericans to learn new ways to incorporate healthy foods into daily meals.

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Blog Note: Two bills under consideration in the NM state legislature could help to curb both smoking and soft drink consumption (New Mexicans consume over 100 million gallons of soft drinks annually.)
SB 30 CIGARETTE TAX INCREASE & DISTRIBUTION
SB 31 NO SOFT DRINK GROSS RECEIPTS DEDUCTION

Visit the the NM legislative bill finder at http://nmlegis.gov/lcs/_locatorcom.aspx?year=10 for more information.