NEWS
Governor calls on lawmakers to approve $250 tax rebates to soften blow of high gas prices
Some lawmakers say tax code changes could deliver more lasting financial relief
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SANTA FE 鈥� With just six months left before she steps down from office, Gov. Michelle Lujan Grisham is calling on state lawmakers to provide a new round of relief for New Mexico taxpayers.
Citing the double-edged impact of the recent Iran war, the outgoing Democratic governor said legislators should use some of a projected $825 million state budget windfall to provide $250 rebate checks to all state taxpayers.
鈥淲hen the state鈥檚 good fortune comes at a direct cost to the people who live here, the appropriate response is to share what we鈥檝e collected,鈥� Lujan Grisham said in a Journal op-ed.
While gas prices have dipped slightly in recent weeks, they鈥檙e still significantly higher across the state than they were in mid-February, according to AAA data. As of Friday, the average cost in New Mexico was 鈥� or slightly more expensive than the national average.
The gas price spike over the last several months has forced New Mexicans who commute for work to make difficult choices, even as the state takes in huge amounts of money from royalties and tax payments. New Mexico is the nation鈥檚 second-highest oil producer 鈥� behind only Texas 鈥� and the recent surge in oil prices has reversed a downward state revenue trend from earlier this year.
However, some key members of the Democratic-controlled Legislature don鈥檛 appear to share the outgoing governor鈥檚 appetite for taxpayer rebates.
Sen. George Mu帽oz, D-Gallup, the chairman of the Senate Finance Committee, said Friday he favors paring back the state鈥檚 personal income tax code as a way of easing the burden on New Mexico taxpayers.
鈥淚 think we need a lasting change in policy,鈥� said Mu帽oz, who added that rebates only provide a short-term economic jolt.
Lawmakers last voted to directly return some of New Mexico鈥檚 revenue windfall to state residents in 2023, when the state issued $500 rebates to taxpayers.
But Mu帽oz and other Democrats have argued the rebates were largely a waste of money and have advocated instead for expanded tax credits and other initiatives. A Republican-backed plan to to all New Mexico residents was stymied during last year鈥檚 legislative session.
From a practical perspective, Lujan Grisham would likely have to call lawmakers back to Santa Fe for a special session in order for rebates 鈥� and potentially other issues 鈥� to be considered before the end of this year.
The governor has called eight special sessions since taking office, including two brief special sessions last year to deal with federal funding impacts. However, calling a special session in her final months in office could be a political risk for Lujan Grisham, especially with a gubernatorial election on tap for November.
Both major party candidates vying to be New Mexico鈥檚 next governor 鈥� Democrat Deb Haaland and Republican Gregg Hull 鈥� have also called for policy changes in response to the recent oil price surge.
Hull has called for the state to eliminate its personal income tax system, while Haaland has expressed support for expanding existing tax credits that primarily benefit low-income state residents.
Meanwhile, the cost of providing $250 rebates to all New Mexico taxpayers would likely exceed $300 million, since the state had more than 1.2 million taxpayers as of last year.
That money could mean less available funding for state programs and initiatives, since much of the projected oil and gas windfall is set to flow directly into trust funds managed by the state.
But Lujan Grisham argued the state is currently on more solid financial footing than many of its residents, saying families have absorbed the downside of the recent gas price spike.
As of last month, New Mexico had roughly $74.8 billion invested in various permanent funds 鈥� up from about $13.4 billion in 2010, according to State Investment Council data. That total value makes New Mexico鈥檚 sovereign wealth fund one of the , just ahead of the national funds of Kazakhstan, Oman and Taiwan.
鈥淣ew Mexico鈥檚 oil revenue windfall belongs to New Mexicans, and I urge state lawmakers to return at least part of it directly to them,鈥� Lujan Grisham said. 鈥淥ur state has spent years practicing the fiscal discipline to weather volatility and to act when the moment calls for it. That moment is now.鈥�
Dan Boyd covers state government and politics for the Journal in Santa Fe. Follow him on X at @DanBoydNM or reach him via email at dboyd@abqjournal.com.
