Republicans and Democrats on Monday threw their support behind a proposal to collect gross receipts tax from major internet retailers such as Amazon and eBay. Legislators have considered several similar proposals in recent years, but backers of House Bill 202 hope that the state’s budget crisis, a changing legal landscape and bipartisan support will send this measure to Republican Gov. Susana Martinez. She has steadfastly opposed all proposals to raise taxes. But other Republicans who have been similarly wary of anything that sounds like a tax increase said during a meeting of the House Business and Industry Committee that they see the bill as ensuring fairness for small businesses competing with internet companies that do not have to pay the state’s 5 percent gross receipts or local taxes. “It’s really just closing a loophole,” said Rep. Monica Youngblood, R-Albuquerque.
Gov. Susana Martinez signed three bills Tuesday to balance the state’s budget, taking about $46 million from the reserves of public schools. But she vetoed cuts to an economic development program and various accounts in New Mexico government. The bills could raise $190 million for the state’s general fund, closing a deficit that was projected to total about $80 million. The measures also will replenish government reserves, though not nearly to the extent of plans proposed in early January by legislative staff and the governor’s own administration. The package will leave the state’s cash reserves at 1.8 percent, rather than nearly 3 percent as previously proposed.
New Mexico’s Road Fund was once considered a pot of money that would keep growing as more people in the state bought higher-priced cars and trucks, then drove extensively for business and recreation. Part of that has come to pass. With three interstate highways crossing New Mexico, increased trucking activity and record tourism, drivers are logging more miles. But they also are buying less gasoline, and the fund for road improvements and maintenance has stagnated. “We’ve seen an increase in traffic in New Mexico,” said state Rep. Larry Larrañaga, R-Albuquerque, a member of the House Transportation Committee.
When state Human Services Secretary Brent Earnest goes before lawmakers to speak about his budget for the Medicaid insurance program, many want to run for cover. One year, he needed as much as $100 million from the general fund to fully pay for all the new enrollees under the federal Affordable Care Act and provide the same level of service. Last fall, he said he needed another $80 million for the fiscal year that begins July 1. On Thursday, he told the House Appropriations and Finance Committee that request had dropped to $42 million. “This is a significantly better picture than you saw in the fall,” Earnest said.
State lawmakers on Wednesday passed the last pieces of a plan to balance New Mexico’s budget for the current fiscal year and rebuild the state’s drained cash reserves, coming to compromises on cuts to education funding and an economic development program. Unclear is whether Republican Gov. Susana Martinez will veto any pieces of the solvency package for fiscal year 2017. She has vowed to protect funding for classroom instruction and the state’s “closing fund” intended to draw prospective investors to the state, but a proposal she preferred would have taken far more money from school districts’ reserve funds than the plan approved by lawmakers. Martinez has three days to act on the bills, and a spokesman said the Governor’s Office will need to closely scrutinize parts of the proposal, echoing the criticisms of House Republicans. “For example, lawmakers chose to protect their personal legislative retirement accounts, while at the same time tried to squeeze money out of other areas of government,” Mike Lonergan said in an email late Wednesday.
While state lawmakers continue to slash budgets, unemployment remains high, and more uncertainty than ever surrounds federal government policies, economists said Tuesday that New Mexico’s economy has stabilized and will see an uptick in growth in the coming year. In testimony before the Senate Finance Committee, economists from the state’s two largest universities said higher energy prices are helping boost growth, and that means higher employment and income levels throughout New Mexico by 2018. Jeff Mitchell, director of the University of New Mexico’s Bureau of Business and Economic Research, said that when he spoke to lawmakers a year ago, the price for a barrel of West Texas Intermediate crude had slumped to $26.60. That benchmark as of Tuesday had climbed to almost $53. “I remember sitting here a year ago and we watched it go to $26.60,” Mitchell said.
While lawmakers say measures to patch an unconstitutional budget hole are the 2017 Legislature’s first priority, disagreements over a solvency package Tuesday kept most of the plan from moving forward to the governor. Four bills together would roll back some capital construction projects, sweep money from cash balances, including dollars earmarked for education reforms and economic development, and tap into reserve funds squirreled away by school districts and charter schools. “No one’s happy about having to cut the public schools in the middle of the year,” said Sen. Mimi Stewart, D-Albuquerque. The exact amount of money that lawmakers scrape together will depend on the final version, but the legislation would beef up state government’s $6 billion general operating fund by adding some $260 million. If signed by Gov. Susana Martinez, as expected, the solvency plan would close a $70 million deficit for the fiscal year that ends June 30.
What Republicans called pork, Democrats called crucial funding for communities and public safety. What Democrats called an effort to modernize accounting practices, Republicans called a gimmick. Less than a week after Gov. Susana Martinez encouraged lawmakers to work together to solve the state’s projected $69 million budget deficit, the House of Representatives on Saturday waged a partisan fight on two bills to make New Mexico solvent. Democrats, who control the House 38-32, saw their bills approved in votes that went mostly along party lines. Similar legislation easily cleared the state Senate with bipartisan support.
ByBruce Krasnow and Andrew Oxford | The New Mexican |
As New Mexico lawmakers work to rebalance government spending for the current fiscal year and prepare to craft a spending package for fiscal year 2018, state House members have agreed to cut their own funding. In a unanimous vote Thursday evening, the House decided to shave about 2.5 percent from the Legislature’s budget and revert some of its own reserve funds. The move follows lawmakers’ decision during a special session last fall to cut 3 percent of legislative spending. The bill will save about $1 million overall, leaving a budget of about $8.7 million for the 60-day session. The original bill called for a legislative budget of about $24.4 million, funding not just the session but also year-round legislative staff and committees that meet in the months between sessions.
New Mexico legislators start their 60-day session Tuesday with plenty of unfinished business, including closing a projected budget deficit of about $67 million. But any hope that the passing of a rancorous election year and the ongoing budget crisis would inspire bipartisan compromise already seems to have evaporated. Instead, Republican Gov. Susana Martinez and top lawmakers have staked out positions that almost guarantee a clash over taxes and spending. In addition, more budget cuts are likely, no matter the outcome. Martinez proposed easing the projected deficit by requiring public employees to pay for a bigger share toward their pensions.