State Rep. Rod Montoya, R-Farmington, announced a plan Wednesday to introduce legislation that would enact a constitutional amendment making it substantially more difficult to raise taxes in New Mexico.
The House minority whip said he plans to introduce the “Taxpayer Bill of Rights” out of concern the Democrat-controlled Legislature is spending far too much money after an influx from Permian Basin oil and gas revenue.
Montoya’s plan would create a constitutional amendment that would require a three-fifths majority in both the state House and Senate to raise taxes. It also would offer taxpayers annual rebates when there’s a budget surplus beyond state spending levels.
In 2019, state coffers were padded with a nearly $900 million surplus from oil and gas extraction revenue. If Montoya’s proposal had been in place, every New Mexico resident would have received a $525 rebate for 2019 and 2020, he said.
Montoya’s House GOP-backed proposal is unlikely to proceed, but if approved by the Legislature, the proposed amendment would go on the ballot for voters to consider in the 2020 general election.
House Majority Whip Doreen Gallegos, D-Las Cruces, argued the proposal likely would limit the state’s ability to pay for much-needed services such as K-12, higher education, roads, public safety and social services.
“These services that were so severely cut back for years; we’ve had a crisis,” Gallegos said. “And this bill would prohibit us from ensuring the needs … of our communities were met. I definitely would like to sit down and talk to leadership and weigh the options, but I’m very concerned.”
Gallegos acknowledged that “we don’t know how long the [oil] boom is going to last,” but she argued that after years of inadequate resources for basic state services, “this is our chance to start digging out of the hole.”
Although Montoya’s bill is not likely to receive a committee hearing, it underscores a debate and a concern that may resonate for years to come: Is the state saving enough of the oil and gas surplus? And what happens when oil and gas money dries up?
Increasing spending with state revenue that comes from a volatile source is unwise, Montoya said. “That’s just not sustainable.”
Gov. Michelle Lujan Grisham has called for an 8.4 percent budget increase to $7.68 billion in overall state spending. The Legislative Finance Committee has recommended a slightly more conservative 6.5 percent increase to $7.54 billion for fiscal year 2021.
Both plans call for 25 percent of the budget to be reserved in a “rainy day” fund out of the same concern that Montoya has in mind. Lawmakers will debate the difference after the 30-day budget session begins Tuesday.
In Colorado, the only state that has enacted a Taxpayer Bill of Rights, critics have decried the constitutional tax limits for severely hamstringing the state’s ability to pay for basic services.
Known by its acronym, TABOR, in Colorado, the law limits annual spending based on the growth of revenue and inflation rates, restricting spending above a certain rate without a similar supermajority vote in the state’s legislature. Enacted in 1992, the law was suspended for five years, from 2005-10, after a decline in public services, and no other state has enacted it.
Critics, including the Center on Budget and Policy Priorities, a nonpartisan think tank, have said Colorado’s public services have taken considerable hits under the tax limits. From 1992 to 2001, Colorado fell from 35th in the nation in K-12 spending to 49th. A similar trend occurred in higher education spending, and the number of low-income children without health insurance doubled from 1992 to 2005, according to the think tank.
Tom Clark, former executive vice president of the Denver Metro Chamber of Commerce, criticized the constitutional amendment for making it harder for Colorado to fund roads and higher education.
Since 2004, TABOR supporters in at least 29 other states have proposed similar measures. They reached the ballot in Florida, Maine, Nebraska, Oregon and Washington state, but were ultimately rejected by voters. Alaska Gov. Mike Dunleavy proposed two constitutional amendments in 2019 that would have similarly restricted spending, but the measures did not gain steam in the Legislature.
In December, Colorado’s TABOR triggered an income tax cut that rewarded the highest income earners significantly more money, the Colorado Sun, a nonprofit news outlet, reported.
People who earned up to $40,000 received an average $10 income tax cut for single filers, the Sun reported. Those who earned $226,000 or more saw a $627 income tax cut.
All told, the state will return $428.3 million to taxpayers for 2019. Colorado returned $927 million to taxpayers in 2001 — about the amount of New Mexico’s 2019 oil and gas revenue surplus.
In the next three fiscal years, Colorado is expected to return about $1.1 billion, the Sun reported.