Over the weekend, the Senate approved a tax package that includes provisions that would exempt affordable housing projects from paying tax on construction and labor.
The bill is hurtling through the legislation process as the final day of the legislature this Thursday looms ever closer. The bill passed its second committee on Friday, only two days before Sunday’s Senate floor vote.
The Senate Finance Committee passed the tax package on a 7-6 party line vote, but did amend the provision so the tax exemption will sunset in 2028. The committee also discussed putting a maximum limit to how much tax could be deducted, but ultimately only changed the sunset date.
Committee Chair, Sen. George Munoz (D-Gallup), said the sunset from the original bill of 2033 combined with no cap for the exemption, could lead to a runaway tax deduction that might “get out of hand.”
Executive Director of the Center for Housing Economics Roger Valdez helped craft the law. He said supporters have been working to ease the fears of people who have questioned the exemption.
“I think we’ve answered the questions that came before the committee and resolved some of those, and I think we’re just looking forward to the legislation moving (forward).”
Valdez said the tax exemption is another way to encourage affordable housing developments, that sets right a simple problem: The state gives money to affordable housing developments, and then taxes that money when it’s spent.
“It's a little bit like making change in the offering plate in church. You put in a 10, and you go in there and take out a one,” he said. “This bill fixes that.”
The package also included a $4 million tax credit for local journalism outlets, deductions for healthcare equipment and physicians income tax credits, among others.
The bIll heads to the house next.
Support for this coverage comes from the W.K. Kellogg foundation.
