New Mexico Senate approves tax increases, spending plan

Article Tools
  • PrintPrinter-Friendly
  • EmailEmail Article
  • ReprintReprints
  • CommentsComments

SANTA FE, N.M. (AP) — The New Mexico Senate approved a $6.1 billion spending plan as well as companion tax increases on Saturday designed to shore up funding for public schools and state agencies amid a budget crisis linked to a downturn in oil prices and a sluggish economy.

A proposed general fund spending increase of $23 million for the fiscal year starting in July cleared the Democrat-led Senate on a 38-8 vote. The two dissenting Democrats said it did not do enough to bolster educational funding, while Republicans expressed reservations about increased court expenses and having only one day to read the fully revised bill.

Funding would increase by 0.5 percent for K-12 public schools, and by 2.5 percent for a judiciary branch that has struggled this year to pay salaries, compensate jurors and provide attorneys to poor defendants. The bill cuts funding to state universities, colleges and specialty schools by 1 percent.

The vote was 34-4 on a separate bill that raises roughly $350 million from an array of new taxes and fees, with only Republicans in opposition.

Republican Senate Minority Leader Stuart Ingle of Portales voted with reluctance for the tax revenue increases saying there was "nothing more that we can do to keep the state running in a somewhat uniform manner."

"There's going to have to be sacrifices from all aspects of our population," he said.

The House approved the original bills and must sign off on Senate revisions before they go to Republican Gov. Susana Martinez, who can veto any and all provisions.

Martinez has vowed to veto outright tax increases, while calling for greater government belt-tightening and indicating she would consider closing tax loopholes.

"She has presented various options to the Legislature that total up to $300 million in savings and is encouraged by recent conversations with lawmakers," said spokesman Chris Sanchez on Saturday in an email.

House Appropriations and Finance Committee Chairwoman Patricia Lundstrom, D-Gallup, said she backs the Senate revisions that included additional tax revenues to boost reserves next year to $190 million in an effort to protect the state's credit rating.

The revised budget package would depend heavily on new tax revenue streams from nonprofit and government hospitals. The health sector has been a bright spot on the state economy, spurred by increased federal spending on Medicaid health care for the poor, but provides relatively little tax revenue, according to state economists.

Taxes also would rise on gasoline sales by 10 cents a gallon and on diesel by 5 cents a gallon to increase reserves and pay for local road maintenance and construction projects. Taxes on vehicle sales would increase by 1 percentage point to 4 percent.

The plan would freeze an ongoing reduction in the state corporate income tax rate, and extend taxes for online sales to all large out-of-state retailers. Amazon announced this week it will begin collecting sales taxes in New Mexico.

The state budget woes are linked to a sluggish state economy and a plunge in oil prices and corresponding state revenues that began in 2015. Oil production in New Mexico set a new record in 2016, but did little to replenish state coffers or restore lost jobs in the energy sector.

State law requires a balanced budget, with scant reserves to fall back on this year. The state has burned through backup funds that totaled more than $700 million in mid-2015, leaving just $77 million in spare cash for the current fiscal year that ends in June.

Funding was slashed in October at most departments, including public education, and was followed this year by a sweep of cash from school district reserves and other government accounts to plug a stubborn deficit and restore a modest cushion.

Public employee and teacher unions continued to pressure lawmakers Saturday to avoid further spending cuts.

Dan Secrist, local political director for the Communications Workers of America that represents 3,000 state workers, cautioned that a proposed overhaul of the federal health care system by the White House and House Republicans could put more pressure on state finances soon.

"We don't believe this (state) government can continue to function without some revenue increases, especially with what is coming out of Washington," he said.


Web Only

You must be logged in to leave a comment. Login |  Register
Ground Rules for Posting
We encourage lively debate, but please be respectful of others. Profanity and personal attacks are prohibited. By commenting, you are agreeing to abide by our user agreement.
All comments are public.

Back to Top Back to Top

Most Popular Stories

Viewed

Emailed

Commented