Creating jobs is one of lawmakers’ top priorities this legislative session and dozens of proposals have already been introduced. Many of them will require the state to spend some money, either by giving up tax revenue or by investing directly.
House Minority Leader Brian Egolf, D-Santa Fe, said Wednesday that he wants to create a Small Business Development Fund that would partner with community banks to lend money to in-state firms.
The proposal (HB 28) would allow up to $100 million from the severance tax permanent fund to be invested in the loans, but the banks would carry 51 percent of the loans—and so more of the risk.
Although the loans would be made at market rates, the State Investment Council has expressed concern that because the loans may not make very much money the loans would cost the state more than $100 million in lost revenue over the next 10 years.
State Rep. Larry Larrañaga, R-Albuquerque, has proposed a tax deduction for New Mexico companies that sell satellite systems and other high-tech services. It would apply to several members of the Professional Aerospace Contractors Association, a New Mexico trade group that strongly supports the bill.
Brian Barnett, an Albuquerque aerospace entrepreneur, says although he doesn’t currently have any contracts that would qualify for the deduction, in the future it could make his satellite company, SatWest, more competitive when bidding against out-of-state companies for federal contracts.
Meanwhile, state Sen. William Sharer, R-Farmington, wants to do away with the whole system of deductions, credits and exemptions—as well as personal income tax—and instead impose a 2 percent gross receipts tax across the board.
“What we have today is what I call a pit of rattlesnakes of tax deductions, credits and exemptions,” Sharer told New Mexico PBS this week. “So we made our path to prosperity hazardous to go down, because of all of the rattlesnakes.”
Transparency is essential with economic development programs in order to evaluate their effectiveness for companies and taxpayers, newly-elected House member Jim Dines, R-Albuquerque, said Friday. Dines is a retired media lawyer who worked on several transparency lawsuits with the New Mexico Foundation for Open Government.
House Majority Leader Nate Gentry, R-Albuquerque, agreed Friday that incentive programs should prove their worthiness.
“I think we have out there about $2 billion of incentives, tax credit and subsidies, so we have to take a look at each to make sure they are providing the anticipated benefit,” he said.
The Martinez administration has released such reports but critics say they lack enough detail to fully capture the amount the state spends.
The Legislature has passed several bills requiring a thorough tax expenditure budget but both Gov. Susana Martinez and former Gov. Bill Richardson vetoed the proposals.