Gov. Susana Martinez will have to decide whether to sign a bill designed to prevent the state government, as well as local governments in Northern New Mexico, from losing tax revenue if a nonprofit university takes over management of Los Alamos National Laboratory later this year. That possibility is real, as two Texas universities have submitted bids for the contract. “We stand to lose about $30 million in gross receipts revenue to the state should a nonprofit contractor receive the [operations contract] at the national laboratory in Los Alamos,” Rep. Stephanie Garcia Richard, D-Los Alamos, told the House of Representatives late Tuesday night before it voted 48-19 in favor of the measure, Senate Bill 17. Garcia Richard’s number is consistent with a fiscal impact report by the Legislative Finance Committee, which estimates the state’s gross receipts tax losses at $25 million to $30 million if a nonprofit is chosen to run the lab. Both the University of Texas System Board of Regents and Texas A&M submitted formal bids on the lab management contract in December.
As one of the tour guides at the New Mexico state Capitol, Dolores Esquibel loves to show off every corner of a building that has, well, no corners. For years, the Española resident has led dozens of visitors through the dizzying maze of hallways and corridors that make up the four floors of the half-century-old Roundhouse. But when lawmakers are in session, her tour is unlikely to include much time in the Rotunda, the open and circular center of the Roundhouse that rises all the way to the governor’s office on the fourth floor. “We usually bring them up here because we can’t do anything downstairs — they’re always having something, some kind of a function,” Esquibel said recently, peering down at the airy and busy Rotunda from the third floor. “Every day during the Legislature, there’s something going on,” she said.
For most of this year, the budget was the hottest topic for legislators and the governor. Both branches battled, then came to an agreement no one seems enthusiastic about. The deal suggested by Gov. Susana Martinez essentially amounted to using bonding money normally reserved for state infrastructure to balance the budget. State lawmakers request the bonding money for state infrastructure projects. Issuing bonds works like a home mortgage: the state borrows money backed by oil and gas revenue and pays it back with interest over the years. Senate Finance Committee Chairman John Arthur Smith, D-Deming, said the funding method “sets a poor precedent” while Senate Minority Leader Stuart Ingle, R-Portales, said he didn’t “like to do this either.”
And yet, the plan passed with a unanimous vote in the House of Representatives and just two dissenting votes in the Senate.
It isn’t often that a bill that it seems no one likes passes a legislative chamber, but that happened Wednesday afternoon in the Senate with two different bills. The chamber voted 36-3 to pass a bill that would essentially borrow money to balance the budget, something that no senator said they were happy about. Update: Added information on a third bill passed by the Senate
The Senate also passed a tax package on a 25-16 vote that included an increase in the gas tax and the motor vehicle excise tax as a way to shore up depleted state reserves. Borrowing money to balance budget
Senator John Arthur Smith, D-Deming, and Senate Minority Leader Stuart Ingle, R-Portales, each mentioned the idea of using severance tax money to help balance the budget came from the governor’s office. “We do not think it is very responsible, it sets a poor precedent…But in an effort to try and find forward movement with the executive branch, we have swallowed that bill and are willing to do it,” Smith said.
The final pieces of a 2018 fiscal year budget were falling into place Thursday with just enough money to balance spending and send lawmakers home without the need for a special session. Those measures were advancing even as other bills — such as an effort to increase the tobacco tax or raise money by closing tax loopholes — died in committees and looked to jeopardize any final agreement. One of the developments came as hospital executives met with Gov. Susana Martinez to discuss a section of House Bill 202, which increases taxes and fees in several areas. One of its provisions would equalize the gross receipts tax on all nonprofit and for-profit hospitals, with the money earmarked for Medicaid. The New Mexico Hospital Association helped craft a compromise with lawmakers to support the tax if some of the $80 million raised could be used to bridge a shortfall in Medicaid, which costs the state $916 million a year.
The state Senate on Wednesday night defeated a bill that would have legalized assisted suicide for terminally ill patients. In a 22-20 vote, seven Democrats joined 15 Republicans to stop the measure. Sen. Liz Stefanics, D-Cerrillos, sponsored Senate Bill 252 to allow people expected to die within six months to obtain a prescription for drugs meant to end their own lives. In addition, a patient would have to be deemed mentally competent by two doctors. The bill called for a mandatory 48-hour waiting period between the time the prescription was written and filled.
An effort to eliminate hundreds of tax breaks for dozens of businesses and service providers while lowering the overall tax rate on sales is moving forward in the Legislature and may become part of a solution to fix New Mexico’s budget deficit for years to come. The measure, sponsored by Rep. Jason Harper, R-Rio Rancho, passed the House of Representatives late Wednesday with no dissenting votes. The initiative had been broadly scaled back from what Harper first proposed with the introduction of House Bill 412, which now has a prime focus on reforming the state’s cumbersome gross receipts tax law. Initial measures to extend that tax to food, as well as changes to income tax rates and how property is valued, were removed from the bill in what House Speaker Brian Egolf called “the largest substitution in the history of the House floor.” Harper accepted the amendments from Rep. Carl Trujillo, D- Santa Fe, as the only realistic way his reforms would move forward.
Lawmakers looking for every possible penny of new revenue to balance the state budget moved ahead with an omnibus tax package Wednesday over the objections of hospitals and medical providers that claimed paying more to the state would harm health care in New Mexico. House Bill 202 is part of an effort to bring in revenue from the fastest-growing part of the state’s economy — physicians, hospitals and clinics, most of which now pay little or no gross receipts tax. Rep. Carl Trujillo, D-Santa Fe, said his bill equalizes the tax among the entire health care sector at just over 3 percent — and that amount is paid on just 40 percent of patient revenue. “I don’t know how you can be more fair than everyone in this profession paying the same,” he said. The measure would raise $250 million for the general fund and restore cash reserves to about 4 percent, Trujillo said.
State lawmakers say revenues are no longer deteriorating but remain flat, and they are moving forward on a 2018 budget with proposals to infuse new revenue — including tax increases — to balance spending and replenish reserves. A new consensus revenue estimate for fiscal year 2018 was expected to be released Wednesday but was pulled back for more study. Still, lawmakers said they do not expect a significant change from December, when economists were forecasting a $125 million deficit for the 2018 fiscal year, which begins July 1. “I don’t believe there’s going to be a material change,” Sen. John Arthur Smith, D-Deming, told the Senate Finance Committee. A forecast presented halfway through last year’s legislative session showed state revenues cratering from the collapse of crude oil prices.
While state lawmakers are pulling out all the stops to find “now money” to plug an expected deficit in the next fiscal year, Rep. Jason Harper has introduced a bill he hopes can put the state on better financial footing for decades to come. Harper, R-Rio Rancho, admits that House Bill 412, the New Mexico Tax Reform Act, is not a quick fix and will not patch the budget in fiscal year 2018 or even 2019. But by restructuring the state gross receipts tax and simplifying income and other tax policies, New Mexico will position itself for more solid growth in the new economy, he said. “It doesn’t help us fix the current budget problem,” Harper said of his bill, “but this hopefully prevents another budget problem.” The measure comes halfway through the 2017 legislative session, when reserve funds have been depleted by efforts to balance budgets for the last fiscal year and the current year, which ends in June, and many lawmakers are focused on raising enough new money to get through the upcoming year.