b'2019 Post WPMAEXPONEW MEXICO Petroleum Marketers Association (NMPMA) ReportNM The proposed budget is $7 billion. Sweeping House Tax Bill Reverses 20 Years Of Tax Cutting; Will Hawks In Senate Buy In? After eight years of conservative tax policy,Do we really need all those reserves we did double-takes whenplus a new revenue stream of $358 poring over the details of thismillion to protect the budget against sessions major tax packagea massive downturn in oil prices? that passed Friday night on aProbably not in the foreseeable future. New Mexico Notes40-25 vote and is now headed Heres why:Ruben Baca to the Senate. How it will fareThe Permian Basin (in NM and TX)NMPMAin that more conservative bodyproduced an average of more than 3.9Executive Director,is up in the air, but from wheremillion barrels per day as of January,New Mexicowe sit this is quite a sensibleaccording to the Energy InformationPetroleum Marketerspiece of legislation that correctsAdministration. Analytics firm IHSAssociationerrors of the past and ensuresMarket estimates Permian production a more reliable revenue streamcould top 5 million barrels a day in for state government. 2023, surpassing Iraq.Here is my take-away on the measure which could be a Thats a lot of oil over the next five years and a whole lot of career-capper for 78 year-old Santa Fe area State Rep. royaltieseven if prices go low. Maybe we will need the $358 Jim Trujillo, chairman of the House Taxation and Revenuemillion in new revenue down the road, but Santa Fe could give Committee, and which was ably ushered through the full New Mexicans a break by taking $300 million in new tax money House by Speaker Egolf. and calling it a very good day. The essence of this legislationwhich would be a major For example, the proposed increase in the excise tax for buy-ing a car goes from 3% to 4.2% and would generate $65 mil-legislative achievement if it survives the Senateis the resto- lion a year. And an increase in car registration fees would raise ration of the progressive tax system in the state. another $37 million annually and go to the road fund. Those areThe highest rates on taxable income would start at $200,000 unnecessary, given the states financial condition and would hurta year for a single household and $300,000 a year for a mar- car-dependent New Mexicans.ried couple. The tax rises to a still modest 6.5 percent. Rates The cigarette/vaping tax would go up and raise $23 million below that are lower so it is truly progressive. Thats a bite out a year. That will garner public support but it is not necessary at of income inequality. Its estimated the new rates will bring in this time.$136 million a year. Amazon already charges NM gross receipts tax on its sales. The bill would restore most of the cut in the capital gainsThe bill would impose them on all Internet sales, raising $24tax that a previous Democratic legislature and Governor million a year. That will level the playing field for local retail-achieved in the name of attracting business. It never did, but ers and is overdue.stock market gains since have cost the state millions in lostrevenue. The reform is said to raise $62 million a year. The House bill does not address the states most critical taxThis one is obscure but supported by the hospitals because challengesomehow reducing the onerous and job-killing gross receipts tax rate that is now nearly 8 percent in the ABQ the new taxes they would pay would end up going into the metro and even higher in other areas. It chases away working Medicaid program. The Feds give the state a three-to-one professionals like medical providers and attorneys. While this match for such spending and that will give the hospitals a bill raises the personal income tax on the best-paid professionals, revenue pop. The bill closes the gross receipts tax loophole for the tax they and economic developers fret most about is the GRT.nonprofit hospitals. Its estimated to bring in about $100 mil-lion in the next budget year. But that large task will have to wait for another session. Lets stop there for a minute because with only those threeOther legislation that is affecting our industry is as follows: reforms the state generates nearly $300 million a year in Competing proposals to raise New Mexicos minimum wage for recurring revenue. Thats plenty for now when you realize we the first time in a decade are moving forward in the State Sen-already have a budget reserve of well over $1 billion set aside ate and theyre becoming more alike as they move along, with and a new rainy day fund that will have over $150 million potential for still further negotiation. Both measures passed the when the new budget year starts July 1. Senate Public Affairs Committee and now move on to another Senate committee. continued on page 52WPMA News / Spring 201949WN19 Spring 49-64.indd 49 3/27/19 10:43 AM'