Court ruling does not mean tax lightning just
Now that the New Mexico Supreme Court has decided it should not ground tax lightning, the state Legislature should take another look at a well-intentioned law and its unfair, unintended consequences.
In 2001, state lawmakers enacted a 3 percent valuation cap on residential properties, primarily to help keep older folks from being taxed out of their longtime homes as property values rose. That was a particular concern with the influx of rich outsiders to places like Santa Fe, who thought nothing of plunking down a lot more money than anyone had ever paid for a local adobe. But when the home changes hands, the property is brought up to near market value.
That penalizes homebuyers fulfilling the American dream of home ownership for the first time, as well as those downsizing, upsizing or relocating. It also depresses the homebuying market because, if these folks have a choice and are savvy enough to ask, they will learn the cap doesn’t apply and they will get hit with property taxes two or three times more than the previous owner — or like Bernalillo County homebuyer Pinghua Zhao, 49 percent more.
The home he bought in 2007 was valued at $244,000 but re-assessed the next year at $363,000.
Three state District Court rulings declared the law unconstitutional, but the state Court of Appeals upheld it and now the high court has affirmed that decision. Using Zhao’s lawsuit, justices determined tax lightning is constitutional because “the Legislature has broad taxing authority. Included is the authority to draw lines which would include the power to impose the cap but with certain conditions.”
While the ruling may be “correct,” that doesn’t make it “just.”
In previous sessions, legislative proposals have included extending the cap to all residential properties; rolling back property values statewide and then adding what amounts to a 3 percent per year increase to the current year; including a ratio that enters new home construction on the tax rolls at a value on par with other similar homes in a county; and bringing most properties up to around market value, with scaled-back valuations for seniors and folks who have been in their home 10 years or longer. (Current “freezes” allowed for disabled and low-income elderly homeowners would still apply.)
None have made it out of the Roundhouse.
Since the justices have allowed a terribly unfair tax to continue, lawmakers should take the high court’s decision as impetus to finally finish what they started in 2001 and put fairness in the equation come the 2015 session.
— Albuquerque Journal