Bill fixing lost tax revenue in Carlsbad passes NM House waits for governor's signature

Mike Smith, Carlsbad Current-Argus
·2 min read

Legislation providing a short-term fix for tax revenue lost by the City of Carlsbad awaits a signature from Gov. Michelle Lujan Grisham after the New Mexico House passed the bill unanimously early Thursday morning.

Senate Bill 292, titled Carlsbad/Eddy County Gross Receipt, received a do pass from the New Mexico House Appropriations and Finance Committee Tuesday afternoon after State Rep. Cathrynn Brown pleaded for passage of the legislation.

The legislation was substituted in the Senate, Tax, Business and Transportation Committee Feb. 10, according to the New Mexico Legislature’s website.

More:Short-term legislation fixing lost Carlsbad tax revenue awaits full legislative approval

Brown said SB 292 was an effort to compensate the City of Carlsbad for lost tax revenue after passage of House Bill 6 nearly four years ago.

Enacted in 2021, HB 6 made changes to sales taxes for online services where the service takes place and not the location of the company providing the service.

Brown and State Sen. Gay Kernan (R-42) crafted SB 292 to provide a one-time appropriation of $25 million for the city and Eddy County for local gross receipts taxes (GRTs) diverted from local governments by HB 6.

SB 292 won full approval of the New Mexico Senate, 34to 0, on Feb. 17. The bill was referred to the House Government, Elections and Indian Affairs Committee Feb. 27 and received a do pass recommendation.

The House passed the measure 61-0 Thursday at 1:16 a.m., according to legislative documents.

“When we went to the new way of taxing it actually hurt the City of Carlsbad,” Brown said.

More:Lawmakers continue short and long-term fixes for City of Carlsbad lost tax revenue

New Mexico’s Legislative Finance Committee (LFC) estimated monthly GRT decreases in the City of Carlsbad at $1.57 million since destination sourcing was enacted nearly two years ago.

Carlsbad Mayor Dale Janway thanked Kernan and Brown and other legislators for working to get SB 292 passed.

“We very much appreciate the strong bipartisan support for this bill, which, if signed into law, will allow the City to immediately address some of the issues caused by the changes to tax policy a few years ago,” he said.

Carlsbad Mayor Dale Janway speaks during the city's Memorial Day ceremony, May 30, 2022 at Carlsbad Veterans Memorial Park. He welcomed passage of Senate Bill 292 by the New Mexico House on March 16, 2023. The bill provides a short-term fix for lost tax revenue in the City of Carlsbad.
Carlsbad Mayor Dale Janway speaks during the city's Memorial Day ceremony, May 30, 2022 at Carlsbad Veterans Memorial Park. He welcomed passage of Senate Bill 292 by the New Mexico House on March 16, 2023. The bill provides a short-term fix for lost tax revenue in the City of Carlsbad.

Ward 3 Carlsbad City Councilor and former Carlsbad MainStreet Director Karla Niemeier called SB 292 "fair."

“It will help the City a little bit,” she said. “I appreciate legislators that are fighting to recognize the needs of southeast New Mexico."

The 60-day New Mexico Legislative session ends at noon on March 18. Legislation not acted upon by the governor by April 7 is pocket vetoed.

Mike Smith can be reached at 575-628-5546 or by email at MSmith@currentargus.com or @ArgusMichae on Twitter.

This article originally appeared on Carlsbad Current-Argus: Tax revenue relief on the way for City of Carlsbad