Tax Veto Puzzle

Governor avoids straight talk about why she vetoed proposed alcohol tax rate hike

BY TED ALCORN NEW MEXICO IN DEPTH

More than a month after Gov. Michelle Lujan Grisham vetoed tentative steps that state legis lators had taken to address New Mexico’s worst-in-the-nation rate of alcohol-re lated deaths, her office offered rationales that don’t square with her actions.

The governor vetoed the first increase in alcohol tax rates in 30 years but she does not oppose increasing alcohol taxes, her spokesperson Maddy Hayden writes in an email to New Mexico In Depth one-penny increase—watered down from a proposed hike of a quarter-per-drink— “would not have a material effect on alco hol prevention and treatment,” Hayden adds, declining to say whether the gover nor supported a larger hike.

The governor also vetoed a measure that would have directed tens of millions of dollars of existing alcohol tax revenues to alcohol treatment and prevention but she “believes unequivocally” that New Mexico needs to devote more resources to addressing alcohol misuse, accord ing to Hayden. The governor felt the Legislature’s tax package represented “a potentially untenable hit to the general fund” and vetoed the reallocation of alco hol tax revenues “out of fiscal responsibil ity,” Hayden says, declining to clarify why the governor didn’t then retain the alco hol tax hike, which would have generated $10 million annually.

The vetoes continue to puzzle and dis appoint senior members of her own ad ministration and Democratic legislators.

Neal Bowen, who since 2019 has di rected the Behavioral Health Services Division, which oversees much of the state’s treatment and prevention services, called the outcome a “missed opportuni ty.” Even that “trivial alcohol tax hike,” Bowen writes in an email to New Mexico In Depth, would have put the state in “a posi tion to support an expansion of screening, treatment, and recovery services specific to alcohol.”

Sen. Gerald Ortiz y Pino, D-Albuquerque, calls the governor’s vetoes “a serious misstep.” He had sponsored a standalone bill to shift half of alcohol tax revenues to treating and preventing alcohol misuse, about $24 million at current tax rates, rather than depositing them in the general fund. Health department data show the state has a serious shortfall of alcohol treatment for beneficiaries of Medicaid would generate tens of millions of dollars of additional revenue. Every dollar the state spends on Medicaid, which insures 34% of New Mexicans, gets matched by the federal government by a ratio of nearly three to one. “We could have seen a $50 million or larger pot of money available to expand treatment,” Ortiz y Pino calculates.

“We’ll have to try again,” he adds, “but it sure would have helped if the governor’s staff had reached out to explain what was behind her decision.”

It often takes years for lawmakers to pass substantial legislation, and efforts to reduce alcohol deaths may be no exception. Hayden says the governor was vote $5 million to a new Office of Alcohol Prevention in the health department. Lawmakers ignored that request, leaving the health department to reallocate $2 million from its base budget for a scaledback version of the office.

Health Secretary Patrick Allen, who was confirmed in February after holding a similar position in Oregon, says even a down-sized alcohol office would be “an incredible step forward” for the state. But he is uncertain when it would begin operating or what it would do. In an interview with New Mexico In Depth in April, he says the health department had not begun filling the office’s dozen positions and he could not predict how long that would take. As of last year, 28% of the positions