Subsidy plan could force local taxes to be raised

March 24, 2013 • State News

ALBUQUERQUE, N.M. (AP) — The New Mexico Legislature’s decision to phase out state reimbursements to local governments for not taxing food and medicine could lead some city and county governments to raise taxes.

The plan adopted by the Legislature on March 16 will require large and mid-sized city and county governments starting in 2016 to accept a payout between 6 percent and 7 percent smaller each year until the state’s “hold harmless” subsidies for the food and medicine taxes are entirely eliminated by 2030.

The hold-harmless provision for cities and counties came into being after the Legislature decided in 2004 to eliminate gross receipts, or sales, taxes on most food items, medicine and medical services. The idea was that the state would absorb the lost tax revenue and spare local governments from the impact.

The elimination of the hold-harmless provision this year was a key component in a tax reform package backed by Login to read more

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