March 10, 2017

Budget, revenue bills head to Senate floor

State Sen. Carroll Leavell broke a personal streak lasting decades by voting Friday for a tax increase.

The Republican from Jal, one of the most conservative parts of the state, joined all other members of the Senate Finance Committee in support of a budget for fiscal year 2018 that is balanced only because of new taxes and fees.

“This is my 21st year and to my recollection it’s probably the first time” supporting a tax increase, he said after the vote. “We’ve run out of any place else to get money and if someone wants to disagree with me, they can show me how to get it.”

Leavell’s comments came after the committee advanced two separate measures. One is the $6.1 billion budget for the fiscal year starting July 1, and the other is a bill that could raise more than $300 million, depending on what portions are signed by Gov. Susana Martinez.

House Bill 2 and House Bill 202 respectively have already been approved by the House of Representatives and are to go to the full Senate this weekend or Monday. But with amendments having been made, both will have to return to the House of Representatives for final passage before heading to the governor for her consideration.

And there are some changes in the Senate bill that indicate lawmakers have been negotiating with Martinez on a final package. Specifically, the Senate added $6.5 million to the Public Education Department for early reading initiatives and another for $9.4 million for targeted education reforms sought by Cabinet Secretary Hanna Skandera.

Of the total general fund budget, K-12 spending totals $2.7 billion, an increase of $13.3 million from this year.

Other increases in the Senate bill include:

o $150,00 to conduct a statewide inventory of building and and property for a master plan.

o $750,000 for increasing payment and credit card security at the Department of Finance and Administration.

o $2 million for private prison contracts, inmate medical care and to handle a larger prison population.

o Legal fees of $1 million for the Public Education Department; $700,000 for the state engineer and attorney general for water rights lawsuits; $700,000 in costs related to a lawsuit over food-stamp eligibility.

o The Senate has also retained money allocated by the House that would increase job training and economic development programs, but lowered the new money to $17 million.

Medicaid spending by the state will be $916 million, about the same as this year.

Cash reserves remain at an all-time low in the state and a new estimate Friday pegs the level at $77 million, just 1.3 percent of the budget. If the revenue package is adopted, that can increase to more than 3 percent for 2018.

The bill includes new taxes for hospitals as well as extending the sales tax to all internet purchases. Other sections of HB 202 would increase the tax on gas and diesel, hike the cost of permits for heavy trucks, and raise the tax on vehicle purchases from 3 to 4 percent of the purchase price.

Sen. John Arthur Smith, D-Deming, also amended the bill to delay the implementation of some scheduled corporate income tax cuts, which would mean another $12.7 million for the general fund.

But Martinez has opposed delaying the tax cuts, saying it breaks a promise made to the business community. She has also said she will veto any gasoline tax increase.

Leavell had also voted against a gasoline tax increase until Friday. “Basically we have to,” he said. “We have to keep the state operating.”

Contact Bruce Krasnow at