All She Wrote
We’re having a public discussion I never thought I’d hear in New Mexico. After many years of tight budgets and hard decisions before the Legislature, we’re now talking about how to share the state’s $825 million oil and gas windfall from the Iran war with taxpayers.
The governor recently suggested a $250 rebate, and the Republicans countered with a proposal to eliminate personal income taxes.
By tossing out a number, the governor got the ball rolling in June. “President Trump’s reckless war in Iran” and the spike in oil prices, she said, was “padding the state’s bank accounts” and “draining New Mexicans’ wallets at the pump.” She noted the increase was especially brutal in rural areas, where people must drive longer distances for work and services.
The two candidates for governor didn’t jump on board. Republican Gregg Hull said he’d rather see a gradual elimination of the personal income tax. Democrat Deb Haaland offered campaign boilerplate about “lowering costs for New Mexicans” through investments in affordable housing, several tax breaks and healthcare reform.
Days later, state Republican leaders pushed the governor to “call an immediate special session for the Legislature to repeal the state personal income tax effective on July 1, 2026.” It would “dramatically increase the household incomes of many low-and moderate-income families who are struggling in paying their bills as higher gasoline prices continue at the pump,” wrote House Minority Leader Gail Armstrong of Magdalena and Reps. Rebecca Dow of Elephant Butte and Alan Martinez of Rio Rancho. And it would stimulate “economic growth and higher living standards.”
Such a repeal would cost the state – and return to taxpayers – about $2.2 billion, according to the Legislative Finance Committee, or about 16% of the general fund budget. That’s a lot. It would be a massive change in public finance.
Republicans made the same proposal in the last legislative session but offered no data and no studies and didn’t call for any. This time they offered a few numbers. The Legislature would “still have more than $12 billion in recurring General Fund revenues to finance the current $11.2 billion in recurring General Fund spending.” That covers ongoing necessities like education, Medicaid and law enforcement. In addition, the state has more than $11 billion in newly created trust funds and a future $2 billion payment from a recent oil and gas lease sale. Is all that enough to backfill the loss of $2.2 billion year after year after year?
The key phrase is this one: “With record levels of state revenues expected to continue over the next several years…”
Even the Republicans see a short-term limit to this windfall. And yet any economist or Roundhouse watcher can tell you the economy goes up and the economy goes down, and it takes state revenues with it. Now add to that the expenses piling up from natural disaster recovery and the so-called big beautiful bill. No wonder a governor’s spokesman told Source NM the Republicans’ proposal would have “recurring and significant budget implications that demand comprehensive analysis and rigorous debate” and that’s not going to happen in a special session.
Armstrong and Dow have been in the Legislature long enough to know this, so they, like Haaland, are just broadcasting political chatter.
The three Republicans wrote that they agree with the suggestion by Sen. George Muñoz, a Gallup Democrat who chairs the Senate Finance Committee, that “the Legislature should repeal the state personal income tax to provide New Mexico’s taxpayers with significant long-term tax relief, not just a one-time rebate.”
On the same day as the Republicans’ letter, Muñoz clarified his position in an op ed: “Reducing – or ultimately eliminating – the personal income tax for working families would provide permanent relief that grows with every paycheck.” He’s previously indicated he doesn’t have much use for rebates.
Muñoz, who is also a businessman, has a keen understanding of the income and outgo of state finance. And he’s well aware of impacts from the Trump administration’s changes to Medicaid and Supplemental Nutrition Assistance Program eligibility for both families and state government. He made it clear that taking care of New Mexicans shouldn’t be sacrificed for a reduction in income taxes.
“As policymakers, we cannot eliminate every financial hardship. But we can make sure state government is making life easier instead of harder,” Muñoz wrote.
“Fiscal responsibility and compassion are not competing values.”
In this discussion Muñoz and Gregg Hull are the adults in the room.
Sherry Robinson is a longtime New Mexico reporter and editor. She has worked in Grants, Gallup, the Albuquerque Journal, New Mexico Business Weekly and Albuquerque Tribune. She is the author of four books. Her columns won first place in 2024 from New Mexico Press Women.
