After two decades of mostly wrong-headed tax policy we did double-takes when poring over the details of this session's major tax package that passed Friday night on a 40-25 vote and is now headed to the Senate. How it will fare in that more conservative body is up in the air, but from where we sit this is quite a sensible piece of legislation that corrects errors of the past and ensures a more reliable revenue stream for state government.

Here are our takeaways on the measure which could be a career capper for 78 year old Santa Fe area State Rep. Jim Trujillo, chairman of the House Taxation and Revenue Committee, and ably ushered through the full House by Speaker Egolf.

--The essence of this legislation--which would be a major legislative achievement if it survives the Senate--is the restoration of the progressive tax system in the state, an American tradition lost in the frenzy to cut taxes the last 20 years, leaving us with essentially a flat tax of 4.9 percent.

--The highest rates on taxable income would start at $200,000 a year for a single household and $300,000 a year for a married couple. The tax rises to a still modest 6.5 percent. Rates below that are lower so it is truly progressive. That's a bite out of  income inequality. It's estimated the new rates will bring in $136 million a year.

--The bill would restore most of the cut in the capital gains tax that a previous Democratic legislature and Governor demolished in the name of attracting business. It never did but stock market gains since have cost the state millions in lost revenue. The reform is said to raise $62 million a year.

--This one is obscure but supported by the hospitals because the new taxes they would pay would end up going into the Medicaid program. The Feds give the state a three to one match for such spending and that will give the hospitals a revenue pop. The bill closes the gross receipts tax loophole for nonprofit hospitals. It's estimated to bring in about $100 million in the next budget year.

--Let's stop there for a minute because with only those three reforms the state generates nearly $300 million a year in recurring revenue. That's plenty for now when you realize we already have a budget reserve  of well over $1 billion set aside and a new "rainy day fund" that will have over $150 million when the new budget year starts July 1.

The proposed budget is $7 billion. Do we really need all those reserves plus a new revenue stream of $358 million to protect the budget against a massive downturn in oil prices? Probably not in the foreseeable future. Here's why, courtesy of the WSJ:

The Permian Basin (in NM and TX) produced an average of more than 3.9 million barrels per day as of January, according to the Energy Information Administration. Analytics firm IHS Markit estimates Permian production could top 5 million barrels a day in 2023, surpassing Iraq.

That's a lot of oil over the next five years and a whole lot of royalties--even if prices go low. Maybe we will need the $358 million in new revenue down the road, but Santa Fe could give New Mexicans a break by taking $300 million in new tax money and calling it a very good day.

For example, the proposed increase in the excise tax for buying a car goes from 3% to 4.2% and would generate $65 million a year. And an increase in car registration fees would raise another $37 million annually and go to the road fund. Those are unnecessary, given the state's financial condition and would hurt car-dependent New Mexicans.

The cigarette/vaping tax would go up and raise $23 million a year. That will garner public support but it is not necessary at this time.

--Amazon already charges NM gross receipts tax on its sales. The bill would impose them on all Internet sales, raising $24 million a year. That will level the playing field for local retailers and is overdue.

The House bill does not address the state's most critical tax challenge--somehow reducing the onerous and job-killing gross receipts tax rate that is now nearly 8 percent in the ABQ metro and even higher in other areas. It chases away working professionals like medical providers and attorneys. While this bill rightfully raises the personal income tax on the best paid professionals, the tax they and economic developers fret most about is the GRT.

But that large task will have to wait for another session, Meantime we can only urge the Senate austerity hawks to let their claws get a bit dull when this tax bill comes over. Most of it deserves a thumbs up (or claws down).

DEAD AS DISCO

"This is a political career that looks as dead as disco," jabbed one of our readers in speaking of former Gov. Susana Martinez. After trying to romance the Trump team this year via Fox News, she had no takers so it was back in the arms of Jeb Bush who has named her to a board of directors slot on his education reform group. It's not a paid gig but probably goes with a stipend for meetings. The Bush education policies created havoc here during Martinez's tenure and with the Dems now in charge many are being swept away.

HUNGRY DEMS

Readers of  the Dem variety also opined on a recent blog article in which we quoted Expo NM Manager Dan Mourning about a possible new arena at the State Fairgrounds. They wondered what Mourning--a member in good standing of the former political machine of Gov Martinez--is still doing in that plum position that Susana appointed him to in 2011 and that pays well over $106,000 a year. "There are a lot of hungry Democrats who need jobs," wrote one. "When will they get that one?"

Well, that's up to MLG. The Democratic Governor has the power of appointment over the job.

E-mail your news and comments. (jmonahan@ix.netcom.com)

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(c)NM POLITICS WITH JOE MONAHAN 2019