May 24, 2017

Senate passes tax package, bill to borrow money to balance budget

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.

“I don’t like to do this either. But the thing about this is the executive was pushing this as part of their funding mechanism,” Ingle said. “And certainly that’s a conservative wing up there, just as we are down here.”

Sen. Carlos Cisneros, D-Questa, sponsored the legislation and also said he was not supportive of the idea, but that it was necessary.

“Clearly this is a big compromise for the legislative body, both the House and the Senate,” Cisneros said.

The money would normally go toward infrastructure projects, but Cisneros said there would be no statewide or individual projects funded this year.

Sen. Craig Brandt, R-Rio Rancho, said the necessity of the bill showed that New Mexico was overspending, and compared the budget to 20 years ago, when the state’s budget was at $2.7 billion.

Cisneros admitted the bill is “not the best remedy, not the most appropriate remedy perhaps, but it’s without a choice.”

Tax package

The Legislature also took another aim at a tax package, even as a wider tax overhaul landed with a thud. The package is aimed at making sure New Mexico has adequate reserves in case of any unforeseen revenue downturns.

“I know it’s a difficult bill, it’s difficult to vote on this, but I think it’s something that we need to do because we need to stabilize our reserves and fix our roads,” Sponsor Clemente Sanchez, D-Grants, said when introducing the bill.

The Senate package would increase the gasoline tax by five cents per gallon, down from the attempted 10 cent-per-gallon increase the Legislature passed during this year’s regular legislative session earlier this year. The funds would go toward road funds.

New Mexico last increased the gas tax in 1993. Seven other states increased gas taxes as of July 1, according to the Fiscal Impact Report.

“We will be still close to our neighboring states and I don’t think it will make us uncompetitive,” Sanchez said, referring to the gas tax.

The bill also would delay the corporate income tax cuts enacted in 2013 for two years.

The bill would also would increase the motor vehicle excise tax until state reserves hit 5 percent.

Sen. Pat Woods, R-Broadview, said an increase in the Weight-Distance Identification Permit Fee, which affects large vehicles, would chase the industry out of New Mexico to neighboring states.

The two bills now head to the state House.

Bill to reinstate funds clears Senate

Later in the night, the Senate voted almost unanimously to reinstate funding to the Legislature and higher education.

Only four Republicans voted against a measure sponsored by Smith that would essentially reverse two high profile vetoes by Martinez.

The aim of the bill was to fund the Legislature and higher education, but much of the Senate floor conversation was about a portion of the bill that would appropriate $400,000 for a comprehensive study on state taxes, excluding gasoline and property taxes.

Sen. William Sharer, R-Farmington, is sponsoring his own, separate, bill that would commission a tax study, and spoke in favor of  Smith’s proposal.

Sharer said previous studies did not give an adequate picture of how well taxes work or how much they benefit the state.

“We don’t know what we don’t know,” Sharer said.

Some Democrats criticized language in the tax study portion of the bill for not being specific enough.

Sen. Cisco McSorley, D-Albuquerque, said the idea didn’t seem “fleshed out” enough.

“The entire study is for a ‘tax study’ and that’s it,” McSorley said.  “There’s no indication of what we want studied.”

Sharer defended his idea to McSorley and others saying the state needs a better and clearer picture of which taxes better serve the state.

“The idea, ultimately,” Sharer said, “is can you make a tax system that is fair to all of us that pays all the bills? [That] doesn’t pick winners and losers.”

Brandt who also voted against the measure, was critical of higher education institutions for not being more thrifty. In particular, Brandt questioned funding differences between remote and main campuses of the University of New Mexico, suggesting the state could get “more bang for our buck” by only keeping the less-expensive remote campuses.