New Mexico 2025 Regular Session

New Mexico House Bill HM51 Compare Versions

Only one version of the bill is available at this time.

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28	28	HOUSE MEMORIAL 51
29	29	57
30	30	TH LEGISLATURE
31	31	- STATE OF NEW MEXICO -
32	32	FIRST SESSION
33	33	, 2025
34	34	INTRODUCED BY
35	35	Patricia A. Lundstrom and Derrick J. Lente and Mark Duncan
36	36	and Micaela Lara Cadena and Elaine Sena Cortez
37	37	A MEMORIAL
38	38	REQUESTING THAT THE CONSENSUS REVENUE ESTIMATING GROUP
39	39	INVESTIGATE AND REPORT ON THE IMPLICATIONS OF STATIC SCORING
40	40	AND DYNAMIC SCORING ON FISCAL POLICY PROPOSALS.
41	41	WHEREAS, accurate economic evaluation is critical to
42	42	maintaining New Mexico's balanced budget, as required by the
43	43	state constitution, and to ensuring that tax and budgetary
44	44	decisions do not create unintended fiscal shortfalls; and
45	45	WHEREAS, static scoring estimates the revenue impact of a
46	46	fiscal policy change by assuming that taxpayers and businesses
47	47	do not significantly alter their behavior in response to the
48	48	change, holding economic output constant and focusing only on
49	49	direct revenue effects; and
50	50	WHEREAS, dynamic scoring takes into account how tax policy
51	51	changes may influence broader economic activity, such as
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79	79	employment, investment and consumer spending, which in turn can
80	80	affect the tax base and overall revenue collections; and
81	81	WHEREAS, while dynamic scoring provides a more
82	82	comprehensive view of the long-term economic effects of tax
83	83	policy, it has been shown to introduce greater uncertainty due
84	84	to the need for economic modeling and assumptions about
85	85	behavioral responses; and
86	86	WHEREAS, New Mexico relies on fiscal impact reports to
87	87	assess the revenue and budgetary implications of taxation and
88	88	spending proposals, and these reports are typically based on
89	89	static scoring methods that do not account for macroeconomic
90	90	feedback effects; and
91	91	WHEREAS, dynamic scoring, which considers changes in
92	92	economic activity resulting from fiscal policy changes, has
93	93	been utilized in the past in New Mexico, including a two-year
94	94	dynamic scoring pilot project authorized by House Bill 28 in
95	95	2003 for proposals with fiscal impacts exceeding ten million
96	96	dollars ($10,000,000); and
97	97	WHEREAS, concerns regarding the complexity and uncertainty
98	98	of dynamic scoring have been raised, including from the
99	99	consensus revenue estimating group, so that its use was
100	100	discontinued following the analyses of former Governor
101	101	Richardson's sponsored tax cuts by the department of finance
102	102	and administration at the time; and
103	103	WHEREAS, the legislative finance committee's fiscal impact
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132	132	reports have noted difficulties in using dynamic scoring for
133	133	budget forecasting, highlighting the uncertainty surrounding
134	134	the magnitude and timing of economic effects beyond direct
135	135	fiscal impacts; and
136	136	WHEREAS, federal agencies, such as the congressional
137	137	budget office and the joint committee on taxation, have
138	138	incorporated dynamic scoring under congressional rules,
139	139	reflecting an ongoing debate about the role of dynamic scoring
140	140	in fiscal policy analysis; and
141	141	WHEREAS, previous research, including a 2014 study by the
142	142	university of New Mexico bureau of business and economic
143	143	research on corporate income tax changes, has demonstrated
144	144	challenges with using dynamic scoring in quantifying economic
145	145	behavior changes resulting from tax policy adjustments; and
146	146	WHEREAS, New Mexico has undertaken significant tax policy
147	147	changes in recent years, including reductions in gross receipts
148	148	tax rates and reductions in personal income tax collections,
149	149	necessitating a clear understanding of the potential revenue
150	150	implications under both static and dynamic scoring models;
151	151	NOW, THEREFORE, BE IT RESOLVED BY THE HOUSE OF
152	152	REPRESENTATIVES OF THE STATE OF NEW MEXICO that the consensus
153	153	revenue estimating group staff be requested to undertake a
154	154	review of literature and a study of the implications of static
155	155	and dynamic scoring on fiscal policy proposals, including both
156	156	taxation and spending and receipts; and
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185	185	BE IT FURTHER RESOLVED that on or before September 1,
186	186	2025, the consensus revenue estimating group staff report their
187	187	findings and any recommendations to members of the legislative
188	188	finance committee, including examples of the application of the
189	189	two scoring methods on specific examples of revenue changes and
190	190	spending proposals, which examples shall include the dynamic
191	191	effects of eliminating or reducing the personal income tax
192	192	along with a commensurate reduction in state spending and
193	193	significant additional highway project construction spending
194	194	with commensurate additional state revenue collections; and
195	195	BE IT FURTHER RESOLVED that copies of this memorial be
196	196	transmitted to the governor, the secretaries of taxation and
197	197	revenue, finance and administration and transportation, the
198	198	chair of the senate finance committee, the chair of the house
199	199	appropriations and finance committee and the director of the
200	200	legislative finance committee.
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