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Bill proposes reducing taxes on coal-related industries

Rep. James Strickler is proposing legislation that would reduce the taxes on coal industries, a measure designed to ...more
Rep. James Strickler is proposing legislation that would reduce the taxes on coal industries, a measure designed to lessen the impact of the planned closure of the San Juan Generating Station in Waterflow.
Daily Times file photo

Story highlights

  • The bill would reduce the gross receipts tax, severance tax, resources and processors tax, and conservation tax rates that coal production and processing facilities pay.
  • The measure would result in a $3.8 million tax reduction in fiscal year 2019 and increase to $11.5 million in fiscal year 2021.
  • House Bill 80 also proposes financing mechanisms for recovering the costs of decommissioned coal-fired power facilities.
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Strickler aims to soften landing for local entites

FARMINGTON — Legislation sponsored by Rep. James Strickler, R-Farmington, attempts to soften the blow of the closure of the San Juan Generating Station and Four Corners Power Plant by reducing taxes on coal industries.

Strickler has sponsored House Bill 220, which would reduce some taxes that coal industries pay. Rep. Eliseo Lee Alcon, D-Milan, and Rep. Harry Garcia, D-Grants, are co-sponsoring the bill.

The bill would reduce the gross receipts tax, severance tax, resources and processors tax, and conservation tax rates that coal production and processing facilities pay. The reductions would start at 25 percent in fiscal year 2019 and increase to 75 percent by fiscal year 2021. The reductions would remain in place through fiscal year 2031.

The bill was scheduled to be heard today by the House Energy, Environment and Natural Resources Committee meeting in Santa Fe. Meetings can be viewed online at nmlegis.gov. The meeting, which was initially scheduled for 1:30 p.m., was delayed because of a debate in the House of Representatives regarding a potential constitutional amendment that would increase distributions from the Land Grant Permanent Fund to early childhood education starting in fiscal year 2020. The committee had not reached a decision on the bill by late this afternoon.

State Rep. District 2 James Strickler, R-Farmington
State Rep. District 2 James Strickler, R-Farmington
Daily Times file photo

According to the fiscal impact report, the measure would result in a $3.8 million tax reduction in fiscal year 2019 and increase to $11.5 million in fiscal year 2021. It would also cost $230,000 to implement, according to the fiscal impact report. The fiscal impact reports are prepared by the Legislative Finance Committee and analyze budget impact, fiscal implications and significant issues.

The coal energy industry has been in a decline over the past decade, and lower tax rates could make make coal more marketable, according to the fiscal impact report.

Last year, the Public Service Company of New Mexico released an integrated resource plan calling for closing the San Juan Generating Station in 2022 and the Four Corners Power Plant in 2031.

When reached by phone today, Strickler said lowering the tax rate on coal would help create a softer landing for the coal mine and power plants.

Senate Bill 47 and House Bill 80 also propose financing mechanisms for recovering the costs of decommissioned coal-fired power facilities. The bills could allow PNM to recover some of those costs by selling bonds. Senate Bill 47 was tabled by the Senate Conservation Committee on Saturday.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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