Gregg Hull (Journal)

Republican gubernatorial candidate Gregg Hull faced off with the cost-of-living crisis and scored, but to win the argument his messaging may need to be sharpened.

While Santa Fe is tied in knots over what to do with billions of oil revenue flowing into state coffers—and as voters suffer exceptionally high food and fuel prices—Hull reintroduced his plan to cut personal income taxes at a closely watched news conference that could change the narrative over how New Mexicans should directly benefit from historic surpluses.

If anything, Hull undersold his plan that would gradually eliminate the personal income tax which is being scorned by Dems as a tax cut "for the rich."  

Hull pointed out that phase one of his plan would eliminate the income tax for single filers making $25,000 and married couples filing jointly making $50,000. But the key part of the plan—the part that extends this tax cut to hundreds of thousands of households—did not make the headlines. It states:

These amounts apply to taxable income after relevant deductions and exemptions, not to gross salary. 

In other words, a single taxpayer grossing around $45,000 a year who after taking allowable deductions brings their taxable income down to $25,000 would pay no personal income tax at all. That would put about $800 a year back into their inflation-stricken wallets.

For a married couple declaring $50,000 in taxable income, their gross income before deductions could be in the $90,000 range and their tax savings would be on the order of $1,700.

So this first phase of the tax cut is not just for those on the very low end—it is complete tax relief for lower and middle-income taxpayers.

According to U.S. Census Bureau the median income for a single-person household in New Mexico is $35,270. Overall, roughly 60% to 65% of single-filer tax returns in New Mexico report gross incomes below $45,000. 

For married couples the median family income in New Mexico is roughly $79,500. The overall median household income across the state is $64,000 to $67,800. A couple making $90,000 is earning well over the state median. Roughly 55% to 60% of married couples filing jointly in the state earn less than $90,000.   

(On the higher end, the Hull plan would reduce annual income tax for a married couple filing jointly with a $200,000 income from $8,989 to $7,250--a savings of $1,700).

THE GOLD 

There could be more political gold in rephrasing the message and emphasizing phase one by declaring:

"Under this plan, single workers earning up to $45,000 and married couples making up to $90,000 will pay $0 in state personal income tax."  

That framing brings in a whole lot of Democrats and independents that Hull needs if he is to overcome Democratic nominee Deb Haaland, who continues to tread cautiously on providing more direct relief to New Mexicans. Her plan is to expand the child tax credit and the working families tax credit. But that sounds like breadcrumbs given the projection of a possible $1 billion state general fund surplus in fiscal year '28 on top of the billions already in reserve.

Hull's phase one would appear to cost around $500 million a year, with the full plan eventually reaching $2 billion. That full elimination may not be realistic, but Hull is already putting majority Democrats on the defensive. House Taxation Committee Chairman Derrick Lente rejects the proposal, but now says he is working on eliminating the personal income tax for lower- and middle-income brackets.

Isn't that exactly what phase one of Hull's plan does? Indeed it does.

THE INFLATION  MONSTER

Majority Leader Trujillo

And more on the inflation front: retired state employees—some 47,000 of them—may have found their champion in another retired state worker: new state Senate Majority Leader Linda Trujillo.. 

The retirees have been fighting for years over their lost cost-of-living adjustments (COLAs) that used to be 3% annually before fiscal hawks stepped in and stripped that benefit from them, arguing that the Public Employees Retirement Association (PERA) fund's long-term soundness would be jeopardized. But the Democrats are staring at an inflation monster, and so we get this from Leader Trujillo:

We’re looking at using a good chunk of the money that is considered to be 'new money' to help make that [increased COLAs] a reality. We’re going to work really hard to take some action to try to make sure that those retirees are getting a better cost-of-living increase than the small amount that they’ve been getting the last few years.

Retired APD Sergeant and government watchdog Dan Klein adds:

In 2020, SB 72 changed the cost-of-living raise for PERA retirees from 2.0% (it had already been reduced from 3%) to a calculation that tied the COLA to the actuarial health of the fund. If PERA ever gets to 100% funded, then the COLA goes back to 3%. No matter what, the COLA will always be at least one-half of one percent (which amounts to about $150 annually, or $13 monthly, for the average PERA retiree). This COLA has not kept up with inflation since 2020.

What the legislature and governor lack is an overall macro plan to deal with the unprecedented flow of cash into state coffers that has gone on for multiple years and is forecast to continue for several more. That plan needs to include direct taxpayer relief—or else taxpayers (both Republicans and Democrats facing a cost-of-living crisis) will make their own plans at the ballot box. Hull gets that, and it may help him win some votes.

JOURNAL GOING EARLY

You just can't count on tradition anymore. Take the ABQ Journal polling schedule. The paper now says it will release their second and final poll of the gubernatorial race on October 11, when for decades the last survey came two or more weeks later—after plenty of early votes had been cast and the candidates' strategies and media message had fully unfolded. This Sunday's release is not on a timetable to predict the election outcome, and that's probably the point—they don't want to. The early release may help Hull, who in the SurveyUSA poll taken Sept. 25–30 was six points behind Haaland, and something similar can be expected in this early poll from the Journal.  

Back tomorrow with more.  

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