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Lawmakers whittle down budget gap

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Special session tries again

By The Staff

SANTA FE — A little bit of everything was thrown into the legislative hopper to get a balanced budget passed this week, as lawmakers began a special session Monday.

The new mixture, approved by Democratic Party leaders last week, includes tax increases and spending cuts in a package of nine bills identified in Governor Richardson’s proclamation. The announcement that defined the agenda was issued shortly before the Senate opened for business at about 2 p.m., followed within the hour by the House.

Members of the two chambers quickly broke up into party caucuses and bills immediately began piling up at the finance committees of each chamber.

“The bills I have seen so far are all going to the finance committee,” said Sen. Majority Floor Leader Michael Sanchez. Sanchez speculated that the work could get finished by late Tuesday or Wednesday afternoon.

Rep. Jeannette Wallace, R-L.A., Sandoval and Santa Fe said she was doubtful that the work would be finished so quickly.

“After three days, we won’t a have budget,” she said. “I don’t have a good feeling about it.”

For one thing, Wallace said, “We’re still divided over taxes and over food taxes in particular and people aren’t comfortable yet with what is being proposed.”

The food tax proposal would reinstate the gross receipts tax on food items that was dropped in 2005.  But unlike the unpopular attempt last month to tax tortillas and soft drinks, the new measure would not be aimed at so-called unhealthy foods this time.

Instead, all food would be taxed again, under a provision intended to raise $71 million in 2011, although the amount of tax would vary according to the local governments. The state has been compensating local governments for the revenue they have been losing, so the idea is to let the cities and counties apply the tax, but not reimburse them.

Other taxes, according to the Associated Press include:

• A quarter-cent increase in the gross receipts tax, which would raise $119 million. The state imposes a 5 percent tax on goods and services. Cities and counties also impose a levy, which varies from location to location but averages about 2 percent statewide.

• A 50-cent increase in the tax on a package of cigarettes. It would generate nearly $24 million. The state tax is currently 91 cents a pack.

• Clarifying that New Mexico’s compensating tax applies to most goods and services purchased by New Mexico businesses and others from out-of-state vendors would raise nearly $12 million. However, the change will not require individuals to pay a tax when they buy items online from out-of-state businesses.

Offsetting the food taxes somewhat is a measure that would expand a tax rebate by $5 million for low-income New Mexicans.

“Some changes will improve the system for low income folks,” Wallace said.

According to the plan, about $100 million in spending would be cut, a 1.8 percent decrease. Public school budgets would decline by 1.2 percent.

A non-recurring grant of federal aid would bridge a $228 million gap between state revenue and expenses.

Benjamin Rodefer, D-Bernalillo, called for an immediate joint caucus of House and Senate democrats.

“We are all part of the same team.” Rodefer said.  “Now is precisely the time we need to start acting that way, working together to address the very serious challenges facing New Mexico,” he said in a press release. The budget plan, he said, was “orchestrated in private by the Governor and a small handful of legislative leaders.”