New Mexico lawmakers advance state fuel tax increases, local fuel tax option

By Keith Goble, Land Line state legislative editor | Thursday, March 09, 2017

As the end of the regular session approaches in New Mexico, multiple pieces of legislation moving forward at the statehouse would make revenue available for state and local road work.

One bill that continues to advance would allow cities and counties to ask voters to pass a special tax on gas and diesel to pay for local road and bridge work.

New Mexico law already permits a local option tax of up to 2 cents per gallon – for gas purchases only – in the state’s six largest counties. No locales have implemented a tax.

The Senate Corporations and Transportation Committee voted to advance a bill to the chamber floor that would authorize collection of a local tax up to 5 cents per gallon on gas and diesel fuels in cities and counties across the state.

Rep. Randal Crowder, R-Clovis, told committee members the bill is necessary to help local governments fix roads and bridges. He ensured the panel that taxes could only be collected in a city or a county, not both.

“They cannot overlap,” he testified.

Rep. Bobby Gonzales, D-Ranchos de Taos, added that the bill gives communities permission to help themselves.

If approved by the full Senate, HB63 would move to the governor’s desk. House lawmakers already approved it on a 60-6 vote.

Gov. Susana Martinez vetoed a bill two years ago to authorize counties and municipalities to set an additional tax on diesel purchases of up to 2 cents per gallon. The governor said at the time she wanted the state to make sure they are managing existing revenue sources well before they call on taxpayers to pay more.

Hopeful the governor will look favorably at the renewed effort, supporters are again pushing the legislation to require city councils and county commissions to put the issue on local ballots before implementing a fuel tax.

According to a fiscal note on the bill, a one penny increase by local governments statewide would raise $9 million annually via gas purchases and another $5 million from diesel.

Advocates say the local-option tax is necessary because local governments are responsible for about 44,000 miles of roads compared to 30,000 miles of roads for which the state is responsible.

Officials with the New Mexico Department of Transportation add that they are not clear how the local option diesel tax would have fit into the International Fuel Tax Agreement or if out-of-state truckers would receive the appropriate credit for payment of the local tax.

In an effort to address state road funds that have dipped below $400 million, Senate lawmakers voted 29-13 to approve a statewide fuel tax increase. The fund is supported by fuel taxes, truck permits, vehicle registrations and other fees.

New Mexico now collects a 17-cent-per-gallon tax on gas purchases. Diesel purchases include a 21-cent tax rate.

SB95 would raise the state’s gas tax by a dime to 27 cents per gallon. The diesel rate would increase by a nickel to 26 cents.

Also included in the latest version of the bill is a provision to increase the vehicle sales tax from 3 to 4 percent.

The tax increases would raise about $189 million a year, according to state estimates. Local governments and the state would ultimately divvy up the new revenue.

Despite the interest at the statehouse to collect more tax at the fuel pump, the likelihood of any tax increase getting the governor’s signature is unlikely. Martinez’s administration recently reiterated the governor’s opposition to outright tax increases. Instead, she wants to work on comprehensive tax reform.

Sen. John Arthur Smith, D-Deming, told Senators the state needs as much as $300 million in new revenues to cover road needs.

“This bill does not take care of our entire problem ... but without it, we will be forced to cut other budgets,” he said.

The bill, SB95, has moved to the House Transportation and Roads Committee. If approved there, it would head to the full House before it can go to the governor’s desk.

The regular session is scheduled to wrap up on March 18.

To view other legislative activities of interest for New Mexico, click here.

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