At Week's End; 615; AWE #615 Taxes, Taxes, Taxes

Kill bars and tone, go to sleep, stand by the low count down now, and you're up 10. Walk out now, stand by the low count down, and let's do the slights. Let's go anyone. Anyone's hot? Stand by the music, music in the box. Stand by the fade music, fade music, and cue Raj. They used to say nothing was certain, but death in taxes. But in New Mexico these days, if you're rich and powerful enough, at least you can avoid paying your fair share of taxes. And for hundreds of thousands of New Mexicans, the elderly, the poor, even the middle class, taxes have become a deadly matter. Join us in this special edition of It Weeks In, here in the New Mexico Legislature, as we discuss property tax reform, and what just may be the opening salvo of a genuine tax revolt here in New Mexico. For many newcomers, New

Mexico is the land of enchantment. But for Native New Mexicans, this land is their land. It is home, and has been for generations. However, keeping the land has often been a struggle. Cruz Rios grew up in New Mexico. After serving his country in the military 40 years ago, he returned home and brought this property. Now retired, Rios hopes to pass it on to his children. But that may be difficult if his property taxes continue to skyrocket. If it keeps on, well, we're all going to lose our homes because I'm an affix to income. And you don't have enough money to continue to pay these taxes. That's why I'm fighting for these property taxes against them. Because it's really hurting many of us people that have been inside of all our lives. Mr. Rios was used to his property taxes going up, but was shocked this November when they nearly doubled. Exceeding his modest monthly income, it took him months to pay it off. Cruz Rios is not alone. In the last decade, property taxes for

some are five times higher than they used to be. When Mr. Rios brought his land in the fifties, he says there were no houses in the area. Today, it is a crowded neighborhood of new and gentrified homes, as the value of property has gone up, so have its taxes. But many say New Mexico can't afford to lower property taxes. That's the money we depend on to provide police service, fire service, road maintenance, everything that the county does comes primarily from that source of revenue. It takes Santa Fe County, for instance, nearly a third of its total revenue comes from its property taxes. And what does this money pay for? More than half of it goes into Santa Fe's public education system. But many argue the property taxes regressive, which means that people of low income pay a larger portion of their income than do wealthy property owners. Citizens for Tax Justice, a community group, say it's time for a fair tax system. They say in 1990, people in the lowest per capita income were paying twice as much as those in the highest per capita. Paying 30 % of your income for property tax would kill anybody. And that's

it in the nutshell. It's killing them. It's going to kill me and other people too in the near future if these rates keep going up. Adding to the problem is unfair property assessment for both residential and commercial properties. The Santa Fe County manager says the law requires him to assess property at current market value, unable for the county to keep up. Some properties get assessed while others go unassessed for years. One example, the song to the crystal water company is currently valued at 13 million. But a recent outside appraisal estimated its value at 44 to 84 million. That's a difference of $31 to $71 million that goes untaxed. Responding to the concerns about unfair property taxes, legislators Eddie Lopez and Ben Luhan are trying to change the law through several House bills. House Bill 25 proposes to assess property at current market value only when it's being bought or sold. The bill will also provide what's called a tax rollback. This would decrease property values to what they were in 1990. From that point on, the property value would only increase at a marginal rate. Because the assessed property values

would go down, taxes would also go down. And it would be fair, right? Not necessarily. Citizens for tax justice say that because the law affects only how property is assessed and not the tax rate, it would still give the biggest break to wealthy property owners. Because they make more, they save more. Also, as property values go down, so would revenues and so do public funds, hurting those with low incomes who are most dependent on public money. Further, they say that to make up for the loss in revenue, counties can still raise property taxes on their own. This would hurt those whose property value hadn't gotten up much since 1990, and therefore wouldn't be rolled back as much, but whose property taxes would go up. So legislators have introduced a second bill, House Bill 965. Citizens for tax justice support this bill and say it is more equitable. The bill creates what's called a graduated transfer tax. This lets counties take revenues from the high -priced properties and transfer that money to a tax credit for those with lower incomes who can't afford their property taxes. Unlike House Bill 25, this bill would not cut revenue. But for

cruise rios, at the heart of what may seem a complicated issue, are the simple things in life, a home, a history, a culture. And if the people of New Mexico don't understand how their government collects and spends its money, they may be the very victims of its own failing tax structure. We're here in the Senate Finance Committee hearing room in the New Mexico legislature with three people who have been in the midst of the property tax reform fight in this session. Gloria Mendoza is a lifelong resident of La Sienega and of Santa Fe. She's a member of Citizens for Property Tax Justice, a Santa Fe advocacy group. Representative Ben Luhan, a Democrat of Santa Fe County, is a principal co -sponsor of House Bill 25, now substituted by a House Committee, and of House Bill 965. They are the main property tax reform measures before the 1993 legislature. And Chris Moore is a researcher at the Santa Fe Institute in Santa Fe. He's also an active member

of Citizens for Property Tax Justice. Thank you all for joining us here at the end of a long day at the legislature. Let me ask you first, Representative Luhan, what this bill is going to do for people who are hurting out there. You know, some families have experienced as much as a 500 % increase in their property taxes. Elderly people are losing their homes because they can no longer pay the tax man. What will this bill do for those people? Roger, I think you want to talk about the low income tax bill first. We have the two bills that will address House Bill 965, which primarily addresses low income people of Santa Fe County. And certainly, the Elderly would fall in that same category, but it also provides credits for low income people regardless of age. And what it does is provides the county to have an

election, to have a meeting to decide whether they're going to offer this credit or not. And at that point in time, they will have to set up a criteria whereby they can give a credit directly to the low income person themselves. This meeting will have to be advertised in a local newspaper and radio, so hopefully that the folks will come out and express their feeling at that point in time. We feel that up to 75 % of the individual's property tax may be credited depending on the income of the individual. So this could save the homes, literally, of some of these people who are now about to lose their houses? Well, it certainly will give them, I think, a lot of relief. Are the counties opposing you on this? They've been devouring taxes from property now for a long time, haven't they? I think it seemed to be not fighting it too much because we offered a transfer tax along with the same credit that they may offer. We offered them an opportunity to have a transfer

tax on new properties that might be exchanged in hands here in Santa Fe. So I think that will make up for some of the rest of the last remaining of the thing we have to lose. Gloria Mendoza, let me ask you, is this going to be part of a larger effort to make the New Mexico tax system more equitable? Representative Luan hopes this will help poor people, some of many of whom are elderly. Is this a blow for tax justice in this state? Well, Roger, this is just a beginning. I think Ben has done well by jumping on the issue, and I think that there still needs to be a lot done. There's still your corporate taxes, your corporations need to be taxed. They're 10 to 20 years behind on the assessments of that. They have

one assessor, a state assessor who does the assessments. He said it would take 52 years to assess them. They need to be assessed, they need to be taxed, and then maybe we could get some of that money to our education. We have elderly people in this state that are paying more proportionately, aren't they, than some of these large corporations? They are. We had a gentleman here in Santa Fe who brought the assessment of the DeVargas Mall, and they are, DeVargas Mall is paying like $3 a square foot. He is a neighbor that lives right there on Fiesta Street, and he brought his and he's paying $5 a square foot on his property. And that's where we are finding the injustices. Part of a larger system of injustice, which goes to the heart of the tax system. Chris Moore, let me ask you, if you were on the other side, and I realize that you're in support here of Representative Luhan's bill, but if you were on the other

side, what loopholes would you like to find in this legislation? What fault could you find with it? Is it really going to address the need here? Well, our group is very much in support of his new bill, Hospital 965, the one we've just been talking about that gives a low income credit. It does also, as he says, pay for it by giving each county the option to have a transfer tax. The transfer tax called for in the bill is not very much. It's only, it's actually 2 % or less. But I suppose if I was a big real estate developer, even that might upset me. I think the other thing is that if you're going to bring revenues in, and a lot of people this year were really concerned very justly about programs like the public schools, if you're going to bring revenues in and you're going to protect the poor, there's only one way out of that. I mean, if you're going to protect the poor, if you're going to give them a break because they're being taxed unfairly, either you're going to let the revenues fall, or you are going to bring in other revenue. And that means, as Gloria said, from corporations,

or from people in the upper income brackets. I think this new bill was really good because with a transfer tax, what you're doing there is that the people who are coming in and buying houses worth $300, $400, $500 ,000, mostly second home buyers and retirees, you're putting a couple percent on that, bringing some revenue in and using that to give the people who've been here all their lives, or less wealthy newcomers a break. So I'm not sure how I would argue against it. Well, but I wonder if you don't run the risk of letting the old system, though, take over. If the counties do not exercise their full responsibility, if there really is a shortfall in revenue here, are we going to find poor people being put upon in some other direction, some other levy. Will there be a movement out of this, say, to raise gross receipts tax, which is already a regressive tax in this state? Well, that is a big problem because New Mexico depends on gross receipts tax as more than most other states. And especially, I mean, it's pretty much the same as a sales tax. And there you're putting a tax

on things like food and milk and necessities. Those kinds of taxes hurt the poor very hard. When we were studying this overall problem, we found that property taxes were hurting the poor proportionately more than the rich. But gross receipts taxes, to be honest, are almost a bigger problem for many people. And I think in next year's session, you may find groups like ours, as well as many other groups, coming forward with proposals to move away from things like gross receipts that hurt the poor and move toward income taxes and corporate taxes that place the burden more fairly on those who can pay. But your local governments cannot increase gross receipts taxes. They don't have the additional imposition to increase gross receipts so that it wouldn't be a problem. Property taxes, the state doesn't receive any property taxes whatsoever unless it's a bond issue that the people have imposed on themselves. Other than that, for operation, general fund purposes, the state doesn't receive one cent

property tax. It all goes to local governments and there can't be an increase in gross receipts for that purpose. So you're confident that we're not going to have any major loopholes in this tax bill at least in 965? I think it's going to have to be up to the people. You know, they're going to have every year that counties don't impose this or put in place this property tax. They'll have to have a public meeting. It's going to be up to people like Gloria and Chris to roll up the troops and make sure that they're at the county commission meetings. And if those people don't want to allow their low income tax rateer will then, you know, just hold the election process. Are we likely to get up a real gnashing of teeth and crying in the night here about the shortfall for schools or shortfall for other counties? Services, I mean, after all, you are your threatening a tax base here, which has been secure and stable for a very long time. Yes, there's a transfer here, which will compensate, but you know these counties and these counties are, as I

said earlier, they're hungry. Are we liable to get out of this again, a different sort of tax from a different direction? Well, again, Roger, the operational monies of the public schools and higher ed doesn't come from property taxes. It comes from budgeted revenues from the state level. The only monies that come to the school districts that they might lose a little bit is on their bond, bond indebtedness. And there's a two mil levy that they impose upon themselves. And it's also, it can't be used for operational. It can only be used for improvements and maintenance of buildings. So the county should be behind this. And certainly, certainly citizens groups, the majority of New Mexicans. We are one of the lower property tax states, but we're also one of the poorest states in terms of income. The opposition that we're going to encounter, Gloria, increases from the real estate

people. Are you feeling that pressure, the real estate lobby here? Not sure, but of course, we haven't gotten to committee on 965 yet. I have a feeling that they will probably be reinforced. Gloria, you about to say? Yes, about these bond elections. You know that when you have bond elections, that is the time where you have the lowest amount of people going out to vote. And they hold these bond elections. They have one this last year. There must have been how many bonds, six that were on there. And I'm trying to get people to where they become aware of some of these things, where they're getting taxed. Some of them don't even know why. And these bond elections are very important. It is so important if there's a bond election going on to read what it is. And to go out and vote. A lot of people don't go out and vote. You take the community college.

I work at the polls, okay? When the community college had their bond election, it was all people who worked at the community college. Very few. I would say, you know, probably out of about 100, we probably got like five or ten people from the community to go out and vote on that. But isn't there a great paradox here? I mean, people complain about taxes. They defeat politicians, as Representative Luhan knows, who try to raise taxes. You know, George Bush gives a pledge, no new taxes, et cetera, et cetera. Yet they pay so little attention to who really pays the tax bills here and how tax policy is made. Aren't you all frustrated by sort of public ignorance and indifference in this field? It really is life and death. Well, I don't feel so much that it's ignorance. I think it's that we, our government has taken for granted that these people are not going to go out there. You know, if they're going to have a bond election, they should have it when there's an

election for, say, mayor, county commissioners, you know, city council, whatever. To bring it just on like six bond issues and bring them in and just have it just for that. I mean, is people aren't going to go out and vote for someone? It's definitely not indifference. I think that as we educated ourselves and tried to educate people in the public about this whole issue, we found ourselves. I mean, the tax system is incredibly complicated and there don't happen to be any lawyers or any legislative experts in our group. We were pouring through all these laws and all the language and these bills. It's very complicated. Lawyers are on the other side of this issue sometimes, not on the side of poor people. Let me ask your representative, Luhan, and I don't want you to take the responsibility for all your colleagues here. But why hasn't the legislature of New Mexico come to grips with all of the inequities and the injustices in this overall tax system? We have a regressive system. We have a lot of tax problems, especially for poor people. You know, people you

represent in Santa Fe County. Many of them are unjustly taxed. When is the legislature going to come to grips with this? Well, Roger, the fact of the matter is, like Roy was pointed out, you know, people don't go to the polls. But on one hand, we want them to go to the polls because we're saying we want them to have the money to be able to build buildings for our kids in schools. And I think one of the things that House Bill 25 addresses to and also 965, if we don't do something of this nature, then what's going to happen is people are not going to vote for bond issues. And this is the argument that I have with the schools. Wait a minute. You know, on one hand, you're saying that it's too high for our teachers here. Because the living is too high and the other hand, you're saying, don't take our revenues away. Well, if we continue to have those high taxes on property, people are going to vote against those bond issues. And they're not going to get any revenue at all. But our people, in your experience as a political leader, aren't people willing to pay if they

think the system is fair? I mean, I think there's an increasing perception out there that the system is not fair. This is what I'm saying. And if we continue to have a spiraling increase like we've had in the last few years, then people are going to say, hey, it's not fair anymore. I'm going to vote against every bond issue. And who's going to lose? It's going to be the kids that are not going to be able to have a building or their buildings maintained and eventually bill all lose. All public services. Is this the beginning to all three of you think? Is this the beginning of a more sweeping tax reform movement in this state? Property tax relief this year, but maybe next year or the year after real reform of income tax, corporate tax for a change would be a nice idea. People paying their fair share. I'll tell you something, Roger, that this committee that formed now during the legislature to deal with property taxes is going to become the citizens for a tax justice. We do not stop here. We're going to continue. We're going to continue meeting. We are going to go to other communities, other counties.

We understand harding is having a hard time. We understand that Albuquerque, North Valley is having a hard time. And in doing what we've done now is what we've tried to do is grow an awareness throughout the state. And of course, the media has not been real helpful because I think they themselves are afraid that there might be a tax revolt here in New Mexico. Well, they're also sometimes baffled by this issue. Maybe frightened, but also perplexed. I think there's that fear that we are finally going to do something. We are finally going to start taxing where we need to tax. Where's the opposition to this? Representative Lujan and Chris put this to both of you. Who's going to be opposed to real tax reform in this state? The big interest, the financial interest, and the corporations themselves. We're going to have a class war in New Mexico over this issue. Well, Roger, I think, you know, certainly centrally assessed property, which is corporations and

business property. Haven't been paying their first year. I agree with Gloria, and I think that that's something that our assessor here in Santa Fe has been lacking. She's gone after residential properties and has kind of forgotten about centrally assessed property. Who's fault is that? Is that just an administrative oversight? Well, I don't want to put blame on anyone, but the fact is that residential property is at about a 90 % clip of current and correct and probably... And there are half a century behind on corporate property. Well, Guilter Settle himself has admitted that 85 % of the assessments in Santa Fe County are up to date. And of course, they started with a low income and the middle income, you know. But we just have a few seconds left. Chris Moore isn't this system badly stacked in favor of the wealthy and the powerful. I know that's an old cliche, but isn't it just dead -down truth in New Mexico? Well, I think that's very much true, and I think that's more true here than in many other states.

And I think it's a matter of people taking the political system back for themselves, and people remembering what democracy means, which is not just voting every couple years in the voting booth, but being involved in groups like ours, watching what the legislature does. Aren't we talking about the preservation of this state in a way what's special about New Mexico? This was a state of small families, traditional culture. We're in danger of losing that, aren't we? We're being encroached daily. I don't know why, but there's people in Santa Fe who are promoting Santa Fe as a little resort city. We don't want to be a resort city. We want to be able to have our families live in the neighborhoods where they grew up. I understand. Thank you all for joining us, and I have to wish you good luck. Gloria Mendoza, Representative Van Luhan, and Chris Moore. And for it weeks in from the New Mexico legislature, I'm Roger Morris.

For more information about citizens for property tax justice, call 986 -2071. If you would like to express your comments, please write at Weeksend in Care of K -N -M -E -T -V -1130 University Boulevard Northeast, Albuquerque, New Mexico, 87102, or call 277 -0686. I do want to tell Ben that Ben, we are ready to support your bill, and you have the total support of this community. The 200 people that were there protesting will be there to support your bill. And incidentally, I'm not an attorney. I've got about high school education with about one year college, and I'm happy that the Lord gave me the perception to be able to work on this thing. For a cassette copy of this at Weeksend program, send $35, which includes shipping and

handling to K -N -M -E -T -V -1200 University Boulevard Northeast, Albuquerque, New Mexico, 87102, or call 1 -800 -328 -563. You