Representative Armstrong, the bill sponsor, told the committee that House Bill 325 would address New Mexico's treatment of construction under the gross receipts tax and said the levy is a major barrier to new housing. "New Mexico GRT can amount to nearly $30,000 on a $400,000 home in some high-tax jurisdictions," Representative Armstrong said.

The bill would reduce GRT burden on new residential construction to improve project feasibility and attract private investment alongside public funding, the sponsor said. The sponsor also emphasized the bill includes a built-in sunset and a cap in the amendment under consideration.

Why it matters: New Mexico faces an estimated shortage of more than 40,000 housing units, witnesses and supporters told the committee. Supporters said lowering the construction tax would stretch subsidy dollars, speed construction and improve the state's competitiveness with neighboring states for builders and developers.

Supporters at the hearing included home builders, housing advocates and the governor’s office of housing. Mackenzie Bishop, co-owner of Abrazo Homes in Albuquerque, described how New Mexico taxes both labor and materials—unlike most states—and said that structure roughly doubles builders' tax burden. "In our business... that can turn into $30,000 or more when you start adding borrowing costs and interest rates for the end consumer," Bishop said. Miles Conway of the Northern New Mexico Builders Association, Daniel Werwath of the governor’s office of housing, and representatives of the New Mexico Association of Realtors, the New Mexico Home Builders Association and the Association of Commercial Real Estate Developers also testified in support.

Amendment and cap: The committee received amendment 231504.2, which the sponsor described as adding both a sunset and a cap tied to FHA loan limits. The sponsor explained the cap is implemented by excluding the deduction for homes priced above the FHA limit in a county; most New Mexico counties were cited as having an FHA limit of about $524,255, with higher limits in Santa Fe and Los Alamos County. Committee members pressed the sponsor on implementation details, and the sponsor said a settlement statement or similar documentation would likely be used to verify the sales price for eligibility.

Fiscal and program details: Supporters said the measure is designed to make subsidy dollars go further and estimated the policy could be evaluated against a roughly $100 million legislative investment to test how many housing units the incentive can produce. Committee staff circulated an updated fiscal impact report (FIR) during the hearing.

Committee action: Representative Duncan moved to temporarily table HB325 as amended. The motion was made during committee debate and accepted; the committee did not vote on final passage at this hearing.

Discussion vs decision: The record distinguishes committee discussion, public comment and a formal motion to temporarily table. No final adoption or roll-call vote on enactment was recorded in the transcript excerpt.

Ending note: Sponsors and proponents said they intend to monitor outcomes during the sunset period if enacted and to work with local governments on any related fiscal impacts.