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Lujan Grisham, Pearce won’t share tax returns

May 28, 2018 GMT

How much do the candidates for New Mexico governor pay in taxes?

Two evidently do not think that it’s anyone’s business.

The New Mexican asked the three Democrats and lone Republican running for the state’s top office to turn over two years’ worth of tax returns.

Only two Democrats — businessman Jeff Apodaca and state Sen. Joseph Cervantes — agreed.

Democrat Michelle Lujan Grisham and presumptive Republican nominee Steve Pearce demurred, offering instead the documents they file as members of Congress, which don’t provide as much detail.

To be sure, releasing tax returns would be an unusual step for a potential governor of New Mexico. It might be fitting, though, as candidates in the Democratic primary have made the business interests of their competitors an issue. And tax returns could help clear up what has turned into a flurry of innuendo and accusations.

Candidates for governor in other states have taken similar steps for years. And with President Donald Trump’s unusual refusal to release his tax returns, a growing number of candidates for governor around the country are holding one another to a higher standard of transparency when it comes to their personal financial dealings.

In New Mexico, where the only financial disclosure form that candidates for governor are required to file is notoriously vague, the standard apparently is not that high.

Reps point to Congressional filings

The New Mexican asked each campaign to provide within one week personal income tax returns filed in 2017 and 2018.

Rather than providing those documents, aides to both Lujan Grisham and Pearce directed the newspaper to disclosures the lawmakers had filed with the U.S. House of Representatives.

Members of Congress are required to report certain income, gifts and debt each year that comes on top of their annual $174,000 salaries.

Perhaps no one in the campaign has spoken more about their own rise from humble beginnings than Pearce, who is featured in a recent TV ad standing outside a dilapidated structure that he said was his first home as a child. He has gone on to a successful career in oil field services, landing him among the wealthier members of Congress.

In his most recent congressional disclosure, for 2016, Pearce and his wife, Cynthia, reported earning between $200,000 and $2 million in capital gains, interest and rent from LFT, LLC and Trinity Industries — property and equipment rental companies in southeastern New Mexico. They also reported earning $100,000 to $1 million in capital gains and interest from Lea County Bancshares, where his wife, Cynthia, has been a director.

Pearce also reported he and his wife are members or shareholders in two other businesses — Exedra and Gree. They also sit on the board of the Steve and Cynthia Pearce Charitable Foundation, which has donated to churches and organizations ranging from a charity for the homeless in Socorro to a group for young Christians, Campus Crusade, and the Lea County Commission for the Arts, according to separate tax filings.

In her congressional disclosure covering 2016, Lujan Grisham reported earning between $15,000 and $50,000 from her stake in Delta Consulting, which she reported selling the following year. Lujan Grisham also reported earning between $2,500 and $5,000 off an office building in Santa Fe. In officially filing to run for governor earlier this year, she reported salary and dividends as her only sources of income over $5,000.

Both Apodaca and Cervantes have questioned Lujan Grisham’s role in Delta Consulting, which manages the state’s health insurance program for patients with particularly costly and complex medical needs. The company won that contract before Lujan Grisham, a former state secretary of health, was elected to her current office, and her campaign maintains she has been not involved in the firm’s day-to-day operations in recent years. Lujan Grisham has disclosed her stake in the firm, too, and her campaign says she divested last year.

But her campaign treasurer, state Rep. Deborah Armstrong — the chairwoman of the state House Health and Human Services Committee — remains the sole shareholder. With the June 5 primary approaching, Apodaca and Cervantes have stepped up their questions about whether the state should be spending money on the program and whether it and the Delta contract are unnecessary amid changes in the health care industry.

In its response to The New Mexican, Lujan Grisham’s campaign pointed to the congressional filings as “much more detailed than what the state of New Mexico requires candidates to disclose.”

Indeed, candidates for governor are only required to disclose the rough outlines of their financial interests.

Each must file a three-page form listing any sources of income and government contracts over $5,000 as well as vague details about any properties they own besides their homes. The forms do not require candidates to disclose their total income or even range of income.

But there is nothing to stop candidates from providing greater detail.

Progressive Democrat Peter DeBenedittis specified his income down to the penny and even attached charts from his business when he filed the obligatory financial disclosure form to run for governor. He dropped out of the race, though, and now works for Apodaca.

Pearce and Cervantes also attached to their disclosures appendices listing particular businesses, though not any numbers.

Candidates for governor in other states have embraced the practice of releasing tax returns to put to rest questions about conflicts of interest, back up other disclosures or simply put their money where their mouths are when it comes to transparency.

Apodaca, Cervantes produce filings

Cervantes, who has campaigned on his record of fighting for more accountability in the Legislature, released six pages of tax returns to The New Mexican.

The documents showed the senator and his wife, Jennifer, paid a total of $163,438 in federal taxes for the year 2016. They also disclosed a total of $26,855 in state taxes that same year.

“I’m doing my part,” the lawyer from Las Cruces said.

Cervantes added that his 2017 return has not yet been filed, as he had applied for an extension.

The couple redacted their income, however.

Cervantes said he was withholding the information because it relates to businesses in which he has a minority interest, including family businesses.

“Although Jennifer and I are willing to sacrifice our privacy, as a candidate for governor, I do not believe my family members, including my father, brother and sister who are my partners, must also sacrifice their own privacy regarding their incomes,” he said in a follow-up email.

Cervantes has disclosed that he has interests worth more than $10,000 in nine businesses in New Mexico, including his law firm in Las Cruces, farms and commercial real estate.

One company leases about 3,500 square feet of office space to the state’s Spaceport Authority, a tie Cervantes cited earlier this year when he recused himself from a Senate vote involving the facility in Southern New Mexico. He also has a contract with the state to represent it as an attorney but said he has not received any business through that contract since he joined the Senate in 2013.

Apodaca was the only candidate to release even one year of his personal income tax returns in full.

The Albuquerque businessman got an extension for 2017. His returns for 2016, filed jointly with his with wife, Jacqueline, show they had an adjusted gross income of $534,696 in 2016. Most of their income — $545,407 — came from wages and salaries.

At the time, Apodaca was an executive at the Spanish-language television and radio company Entravision (he had a falling out with the company that year and sued for wrongful discharge, later settling out of court).

The couple had a total of $136,648 in federal taxes. That means they had an effective tax rate of about 25 percent.

Apodaca reported a loss of about $24,000 on his business, 47 LLC — a venture firm. His campaign says he has stepped away from the day-to-day operations of that business, though he has declined to identify its clients. And he has stepped back from the daily operations of a startup that works on electric vehicle charging stations.

The Apodacas reported directly donating $30,475 to charities, including the University of New Mexico Cancer Center, University of New Mexico Athletics, Prince of Peace Church, Sagebrush Community Church and his foundation that benefits cancer survivors.

Follow Andrew Oxford on Twitter @andrewboxford.