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At least one New Mexico city is facing bankruptcy after a private prison company, which donated tens-of-thousands of dollars to New Mexico Governor Susana Martinez, was granted a $2 million+ tax appeal by Martinez’s administration earlier this year
In early July, the New Mexico city of Santa Rosa was hit with a $400,000 tax bill from the state. The amount quickly tripled to more than $1.2 million – more than half of the city’s annual budget. The “Dear John” response that accompanied the stated simply that an unnamed corporation had won a tax appeal with the governor’s Taxation and Revenue Department and was owed more gross receipts tax overpayments. The city of Santa Rosa had collected those taxes based on a formula provided by the state.
The communities of Grants, Jemez Springs, Hobbs, Clayton and Causey as well as Guadalupe County also reported being hit with tax bills. The total corporate tax refund has been reported up to $2.7 million.
Martinez’s administration refused to identify the company to the cities, demandingmillions of dollars in local revenues to pay the secret company. Similarly, the state refused to say on what part of the tax code the appeal was based.
Though the state had never notified the municipalities that an appeal was underway, nor that their revenues were in jeopardy if the state lost the appeal, it demanded immediate payment. In response, Guadalupe County stopped payment to a municipal fire department, a local paper reported.
Fearing bankruptcy, Santa Rosa petitioned the state’s Board of Finance, chaired byGovernor Martinez, for an emergency loan to avoid bankruptcy. Led by Martinez the board denied an emergency loan to prevent city bankruptcy, despite receiving notice that the state had a $250 million surplus in the bank.
Though the state still refuses to confirm the name of the corporation, the Guadalupe County Communicator reported this week that records obtained from the state show that just a handful of companies generated the more than $1.6 million in taxes in the area, and only the for-profit GEO Group’s private prison did business in Santa Rosa.
Private prisons are also run by Corrections Corporation of America (CCA) in Grants and Hobbs, other communities hit by the corporate tax refund scandal. Tax decisions applicable to one corporation in a specific industry, like the GEO Group, are almost certainly applicable to similar companies in the industry, like CCA.
Late last year, Martinez’s administration fined the for-profit prison operators more than $1.1 million for contract violations. That fine was effectively reversed just six months later, when their tax appeal returned more than double that amount to the companies.
Online campaign disclosures show that the GEO Group gave more than $41,000 to New Mexico Republican candidates and parties since 2010, including $33,000 to Martinez herself. That is more than five times the corporate contributions given to Democrats.
“This is absurd,” says Pat Davis of ProgressNow New Mexico. “This out-of-state company gave tens-of-thousands to the governor and her party then they sneak in a secret tax deal the governor says we have no right to know.”
“This governor is letting an entire town go bankrupt to fix her administration’s mistake, and the only one who wins is some huge Florida corporation? And how could our governor be so heartless as to deny a simple loan to save the town when she is sitting on hundreds-of-millions of dollars in the bank.”
A 2010 report by ThinkProgress stated that CCA and the GEO Group reported more than $2.9 billion in revenue together and had aggressively enhanced their lobbying efforts, donating more than $6 million to state candidates.