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Medical GRT is gone, but could more incentives draw doctors to NM?
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EDITOR’S NOTE: The Health of New Mexico is a series of articles aimed at breaking down the state’s doctor shortage. Each week a different topic that’s playing into the shortage will be introduced and discussed with input from state legislators and Dr. Julie Harrigan, founder and CMO of Physician EHR Solutions, LLC, who practices and consults not only in New Mexico but also several states around the country. Article 3 focuses on tax incentives and GRT changes.
For years, GRT plagued New Mexico doctors and may have even chased them out of the state.
“It was an extra 8% on top of what you’re already paying for taxes, and then there’s no other tax incentives for providers, so, I mean, who wants to pay an extra 8%?” Dr. Julie Harrigan said on episode three of Health of New Mexico. “That was one of the topics of conversation I had just recently with a group in town, where we were talking about GRT and bringing new physicians into the state and then retaining them. And having to pay that 8% over the top, which is only about 1/16 of all of the state GRT coming in.”
Harrigan, founder and CMO of EHR physicians solutions who practices and consults in several other states, was delighted to hear of the recent end to GRT in the medical field, and the news was something of a surprise to her.
“I don’t even think my CPA knows that,” she said. “I mean, at this point, I think there’s going to be a lot of people who are truly surprised by that.”
“That was part of the tax package that was actually kind of my baptism into the tax world where I ended up being the lead negotiator for the entire tax package,” said state Sen. Craig Brandt. “I was able to keep that portion in, which was the GRT reduction, but then when the governor started vetoing things, I actually was able to advocate with the governor and get her to agree to keep that in, so that was jus a huge win for me, it was a huge win for our caucus and I think it was a huge win for our docs.”
And, he said, that change is permanent as it has no sunset.
The exemption is for all medical services, he said, but he would like to see the change go even further.
“We’re one of the only states that even taxes services because we do the GRT instead of the sales tax,” he said. “We could just get rid of the GRT and convert to a sales tax, and we wouldn’t have this problem in any services. … Honestly, these last few years, we’ve had plenty of income that we should be able to do that, but I just don’t think the majority that’s in the Legislature really wants to lower taxes of any kind.”
And, Brandt said, it’s getting to the point that there’s so many exemptions — 304 groups and companies, he said — to the GRT that the state should just go ahead and make the change.
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“Honestly, it’s like Swiss cheese, right? I mean, there’s all kinds of holes in it,” he said. “It’s time to melt down the cheese, get rid of the GRT and go to a straight sales tax.”
“It seems like if you’re eliminating all of these companies, at some point, the coin is going to flip, right?” Harrigan said. “You should be making more in sales tax than you were in GRT.”
But is there more with incentives New Mexico could be doing to attract and retain doctors, such as giving them a temporary exemption for income tax that other states offer?
“It’s something that we need to look at as kind of an all-of-the-above approach,” Brandt said. “There’s a lot of tax incentives that we could put in place. We can look at some of the other states.
“The one (program) we do have is the loan repayment,” he continued. “It’s not as high as some other states, and so we need to look at it.”
“It’s very low compared to other states,” Harrigan chimed in.
“It’s a federal program with the state, so they both put money into the pool,” Brandt said. “There’s some requirements that have to be there. … You have to be in areas that don’t have enough doctors, that they don’t have enough medical.
“It’s not just for doctors, which is one of the things I didn’t know; it’s actually for anyone in the medical field. There’s a lot in that that are eligible for those, and that may be just another one of those that we’re not getting the word out enough, that we actually do offer that in this state,” Brandt said. “And then we need to look at, ‘Is this actually being used?’ I think the state only puts in about $15 million a year. Is that all being used? If it is, then we probably need to increase that so we can help these medical practitioners all up and down the scale.”
However, if they’re only getting $10,000 a year, he noted, it’s going to take a long time to pay that off, though “I’m not saying that we should pay it all off,” he said.
Harrigan said a doctor can come of out schooling with $300,000-$500,000 in loans and that New Mexico could be doing more with its loan repayment programs to get in line with other states.
“In most loan relocation programs, you do a certain number of years and your debt is forgiven, whereas if you just give them a percentage of it, that’s just not incentive enough when you can go to Nevada and they’ll pay your entire (debt),” Harrigan said. “I have a very good friend that did that. She had $425,000 in debt, and in three years it was paid off. She then stayed in Carson City. She’s an OB/GYN, she’s making really good money, she’s established in the community, she’s part of the community.”
Brandt seemed open to the idea, saying something like that could start in the areas of the highest need. “OB/GYN is one of the ones that we have the most needs because that’s one of the ones that have left the state in droves.”
“If we’re thinking longevitously, it’s not just about getting doctors to come to the state,” Harrigan said. “It’s about becoming part of the community, and then hopefully staying here and helping those communities flourish and really helping that patient population.”
