Richardson Vetoes Food Tax

It is being reported by the Albuquerque Journal that Governor Richardson has vetoed the food tax while approving, as expected a 75 cent hike in the cigarette tax, a .25% hike in the GRT, and a personal income tax hike for about one-fourth of New Mexico taxpayers. Total approved hikes come to $170 million.

Richardson says he’ll close the budget gap “by dipping into cash reserves, employing $20 million in federal stimulus money and cutting state agency spending as a last resort.” Of course, I’d rather have seen Richardson veto any one of the other tax hikes due to the economic harm (or harm to specific groups) that they inflict. It will be interesting to see how Richardson does in fact “close” the budget deficit. It seems more likely that the issue will have to be revisited either before Richardson leaves office or immediately by the next governor.

After all, according to the Legislative Finance Committee, FY 2010 revenues were down 9.3% over the prior year. The estimates for FY 2011 are for an absurd 6.2% jump in revenue. That 15.3% turnaround seems unlikely at best. Anyway, enjoy your tax-free groceries while you can. As for the rest of us taxpayers, we’re stuck with a worse economy and a more difficult business climate.