Social security tax bill stalls in first House committee

Jan. 26—SANTA FE — Despite recent support from Gov. Michelle Lujan Grisham, a bill exempting Social Security retirement income from taxation stalled Tuesday in its first House committee amid debate over who would — and who would not — see financial relief.

While backers said the proposal, House Bill 48, would reduce the tax burden for New Mexico senior citizens and bolster the state's economy, skeptics said it would primarily benefit higher-income residents.

"All we're doing is helping those that have money," said Rep. Eliseo Alcon, D-Milan, who acknowledged the bill would benefit him personally but said the money it would cost to enact it would be better spent on rebates for low-income New Mexicans.

He was one of four Democrats on the House Labor, Veterans' and Military Affairs Committee to vote against the legislation, while Rep. Miguel P. Garcia, D-Albuquerque, joined the panel's three Republican members in casting "yes" votes.

The tie 4-4 vote means the proposal, one of several measures filed at the Roundhouse dealing with taxing Social Security benefits, could be brought back for further debate.

But the initial vote could be an inauspicious sign for supporters, who had hoped the governor's support could give the legislation a boost after similar proposals came up short in recent years.

Rep. Cathrynn Brown, R-Carlsbad, one of the bill's sponsors, said inflation has put an added strain on elderly New Mexicans. She also suggested recent tax changes have largely benefited low-income residents.

"The question is: We're doing a lot for the poor, and that's a good thing, but what about everybody else?" Brown said during Tuesday's hearing.

The state's personal income tax was not levied on Social Security benefits until 1990, when a provision buried in a tax bill triggered the change.

Reinstating the exemption would cost the state an estimated $118.1 million in foregone revenue in the coming fiscal year, according to a legislative analysis of the bill.

Backers said it could benefit the state in other ways, however, as retirees could end up spending much of the extra income on basic necessities.

Katrina Hotrum-Lopez, who leads the state Aging and Long-Term Services Department, said many seniors have expressed support for the concept and said it would particularly benefit seniors in rural parts of the state.

"They need that money in their pocket and many of them are raising their grandchildren and need support and help in doing that," Hotrum-Lopez said.

However, critics said it would not help those who need assistance the most, as New Mexico's personal income tax is currently only levied on income above $24,800 annually for a married couple filing jointly.

This year's tax debate comes as the number of senior citizens living in New Mexico has steadily increased in recent years, while the state's overall population has grown at a slower rate.

New Mexicans age 65 or older were estimated to make up 18% of the state's population as of last year — up from 11.7% in 2000, according to the U.S. Census Bureau.