In 2019 the New Mexico Legislature passed a big tax hike despite the existence of a large budget surplus. Since the 2019 session and despite the COVID 19 pandemic, New Mexico government spending has continued grow.
And, as we push beyond the pandemic and the 2021 legislative session, New Mexico’s budget is again growing as are revenues. The House-passed budget would, if adopted, increase annual spending by nearly 5% while giving pay raises to government employees.
Now, HB 291 has passed the House largely along partisan lines although a few Democrats joined Republicans in opposition. The bill is ANOTHER income tax increase which would take the top rate from 5.9% (where it was after HB 6 increased it from 4.9%) to 6.5%.
Perhaps most troubling is the bill would allow the assessments used in property tax calculations to climb up to a mind-blowing 10% a year – rather than the usual 3% limit – for homes that aren’t the owner’s principal residence, beginning in 2024. It is questionable whether this kind of tax discrimination is even legal (especially since 2nd homes use FEWER services than homes that are occupied full-time), but this Democrat-dominated Legislature doesn’t seem to care much for details.
The bill now moves to the Senate where we will keep a close eye on it.