LAS CRUCES - A bill that would give a tax break to restaurants and a $600 check to low-income workers was passed unanimously and enthusiastically out of the state Senate Taxation Business and Transportation Committee on Tuesday, Jan. 26.
The only resistance came in a warning from Sen. Gay Kernan, R-Hobbs, who cautioned that new federal restrictions of oil and gas production will have a negative impact on the state budget. But, there was complete agreement that restaurants in New Mexico have been harmed by restrictions put in place to combat the COVID-19 pandemic, and need help.
“I’ve spoken with several restaurant owners in Silver City, and all of them are saying this has been their most difficult year,” said Sen. Siah Correa Hemphill, D-Silver City, a cosponsor of the bill. Restaurants are reporting drops in revenue of 60 to 70 percent, she said.
The bill would give restaurants a four-month gross receipts tax break, from March 1 to June 30. And, it would provide $600 checks to those earning $31,200 a year or less who are already claiming the working families tax credit.
“What this bill does is, it provides a clear mechanism to pump out about $100 million of direct economic stimulus to the working poor in New Mexico,” said Sen. Jacob Candaleria, D-Albuquerque.
He said because those people have expenses that need to be paid immediately, the money would have an instant impact for the state’s economy.
Bill Jordan of New Mexico Voices for Children, said the earned income tax credit has proven to be one of the most effective measures in fighting poverty.
“Building on this credit is a targeted and effective way to help low-income families and families of color who have been hit especially hard during this pandemic,” he said.
Correa Hemphill said senators chose the months of March through June to give restaurants a tax break because those have typically been their busiest periods. Sen. Peter Wirth, D-Santa Fe, the Senate majority leader and another cosponsor, noted that a hold-harmless provision in the bill would reimburse local governments for their share of the lost GRT.
Senate Minority Whip Craig Brandt, R-Rio Rancho, supported the bill, but argued that what restaurants really needed was for Gov. Michelle Lujan Grisham to loosen the restrictions imposed in response to the COVID-19 pandemic.
“The most important thing we need to do is open the economy back up,” he said. “All these businesses want to do is open their doors and let their customers back in.”
The bill is not intended for fast-food chain restaurants. But finding a way in statute to exclude them has been challenging, said Sen. Ron Griggs, R-Alamogordo.
“The struggle they’ve had forever is trying to separate out the McDonalds of the world from other types of restaurants,” Griggs said.
For now, they are relying on language in alcohol control regulations, but that could be reworked as the bill goes through the process, Wirth said.
There were also technical questions about the $600 checks and how they would apply to couples filing jointly. Those details are expected to be addressed in the Senate Finance Committee, where the bill goes next.
The only concern beyond those technical issues was cost. The staff analysis on the bill estimates a total cost of more than $185 million, with the caveat that exact estimates are impossible to predict.
Kernan pointed to recent moves by the Biden administration to restrict oil and gas production, including a temporary halt on new leases for drilling on federal land, in warning that the state may not have as much revenue in the coming fiscal year as lawmakers now expect.
“It’s hard for me to vote on bills that are going to cost the state of New Mexico right now, because we don’t know what we’re going to have. I am not confident that the revenue forecast given in December, or even January, is accurate at this point,” she said. “It’s not looking good down here (in Hobbs).
“This is a good bill,” Kernan said. “I’m going to support this bill, but we sure better know what we have as a state.”
The committee also passed a separate bill, Senate Bill 2, that would waive fees for liquor licenses issued this year. Both bills will now go to the Senate Finance Committee.