A task force appointed by the governor to look at various proposals to raise taxes to help ease the state's budget crisis wrapped up its work Thursday. And, just as it was at the panel's first meeting, the most-discussed idea was a proposal to start taxing groceries again.

Terri Cole, executive director of the Albuquerque Chamber of Commerce, said reinstating the gross-receipts tax on food will be a priority of her organization during the next legislative session. She told reporters after the meeting that she realizes the idea is controversial and will be strongly opposed by many people. "It's bad politics, but very good policy," she said.

The state stopped taxing most grocery items in 2004.

Bringing back the food tax would decrease the need for the state to raise other taxes in other areas, such as personal and corporate income taxes, Cole said. "It would be the only revenue enhancement we'd need," she said.

Earlier this week, Sen. John Arthur Smith, D-Deming, chairman of the Senate Finance Committee, said he doesn't think the Legislature will pass any tax increases — except perhaps on food.

One of the strongest opponents of the food tax will be Fred Nathan, executive director of the Santa Fe think tank Think New Mexico, which pushed to end the tax in the early part of the decade.

"If we go back and reimpose the food tax, we will once again be treating farm animals better than our children," Nathan told the task force. "Don't forget that food would include baby food, and in New Mexico, horse feed is tax exempt. What kind of message would reimposing the tax on baby food send about our values?"

According to figures in the report the task force will present to Gov. Bill Richardson next week, applying the gross-receipts tax to food would raise $228 million next year.

But Nathan and other opponents say the ones most affected by the food tax would be people who spend a bigger percentage of their incomes on food — lower income residents and those with large families.

Cole said her business is working on a proposal for the state to spend $20 to $30 million on food banks. Food banks should become centers where people could apply for food stamps, she said.

Last week a coalition of various religious and social-activist groups — including the New Mexico Conference of Catholic Bishops, the New Mexico Conference of Churches, American Association of Retired People and the Santa Fe Alliance — organized to fight any increase in food taxes. Lt. Gov. Diane Denish came out against the return of the food tax. The Santa Fe County Democratic Party recently passed a resolution against the proposal.

During Thursday's meeting, several members of the business community who are on the task force complained that the panel didn't get to deal with ways of decreasing government spending.

This provoked member Bill Jordan, director of New Mexico Voices for Children, to argue that cutting taxes in the first years of the Richardson administration contributed to the current budget crisis.

"Most of those tax cuts were at the urging of the business community," Jordan later told a reporter. "They got the benefit of those tax cuts. Now that we're in a crisis they don't want us to raise taxes, they want to cut services to working families."

The task force looked at arguments for and against raising personal and corporate income taxes, the estate tax, as well as proposals to raise taxes on food, cigarettes, alcohol, motor vehicles, oil and gas, and other areas.

Tax and Revenue Department Secretary Rick Homans said the report to be given to Richardson on Tuesday will "provide a very clear set of tools that be used to balance the budget." He declined to predict which, if any, proposals the governor will endorse.

Contact Steve Terrell at 986-3037 or sterrell@sfnewmexican.com. Read his political blog at roundhouseroundup.com.