Tax Lightning Legislation Could Be Victim of Time Again
By James Monteleone / Journal Staff Writeron
Tue, Feb 14, 2012
SANTA FE — Legislation that would put an end to property "tax lightning" faces an uphill battle to get approval from the House before the session grinds to a halt Thursday.
"Tax lightning" is the term for the significant jump in a homeowner’s assessed property value to market rate immediately after a home is purchased, while neighbors’ values are protected from increasing by more than 3 percent per year.
The bill would protect new homebuyers from the higher tax by prohibiting the practice of increasing taxable property values to market rate after a home is purchased. Instead, a new owner would also be protected from assessed value increases higher than 3 percent per year.
"This makes it fair. That’s all I’ve asked for is fairness," said bill sponsor Sen. Tim Eichenberg, D-Albuquerque.
Supporters are optimistic the tax lightning fix in Senate Bill 145 still has time for a fate better than last year, when the legislation was minutes away from final passage when the session ended, killing all unfinished bills. SB 145 was referred to two House committees on Monday after being passed 24-9 by the Senate late Sunday.
But its first stop, the House Taxation and Revenue Committee, isn’t expected to hear the tax lightning bill until at least Wednesday, when the committee’s next meeting is scheduled, said committee Chairman Edward Sandoval, D-Albuquerque.
"I’m not going to hold it back, I’m not trying to kill anything, but we’re at the last minute here," Sandoval said.
Sandoval said committee members still have some concerns that shielding new homebuyers from market rate taxable home values would unfairly shift the tax burden to other taxpayers, such as commercial property owners.
That committee last year added an amendment to delay the bill’s effective dates by six months with a 10-5 vote taken two days before the session ended. The amended bill went on to pass the House 53-10 in the final minutes of the session. The bill wasn’t sent to the Governor’s Office because the Senate did not have a chance to review the late amendments.
Sen. Mark Boitano, R-Albuquerque, a supporter of the bill, said there’s still time to get the tax lightning fix through the House and to Gov. Susana Martinez’s office. Boitano said Martinez has expressed some support for the effort. A governor’s spokesman did not return a request for comment on the issue.
"We’ve got 2 1/2 days. That’s a significant amount of time," Boitano said. "This is crunch time. And the good news is we’re still in it, and that’s all that matters."
Tax lightning was the unintended consequence of a 2001 law sponsored by House Speaker Ben Lujan to protect long-term homeowners from property taxes that correspond with skyrocketing home values in communities around Santa Fe and Taos. The bill limited the annual housing value increase at 3 percent for existing homeowners and only increased values to market rate for new homebuyers.
That disparity, however, is being challenged in state courts. If the law is found unconstitutional, all property values in New Mexico could potentially be increased to current market rates, which for many would mean a property tax bill that doubles, Eichenberg said.
— This article appeared on page A4 of the Albuquerque Journal
