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NM lawmakers lack budget deal as session nears end

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By The Staff

SANTA FE, N.M. (AP) — The New Mexico Legislature neared adjournment without an agreement on a state budget or taxes to pay for government operations in the coming year.

The Legislature's 30-day session ends at noon Thursday.

Unless a last-minute budget deal is reached, it will be necessary for lawmakers to return to work later in a special session to approve a plan for financing public schools and government services in the fiscal year starting in July.

Senate Majority Leader Michael Sanchez, D-Belen, said a budget-balancing compromise appeared unlikely before adjournment.

"I'm pretty disappointed. We did give it a try. For a while I though we were there. I really did," Sanchez said after the Senate took a post-midnight break Thursday for lawmakers to get a few hours sleep before the final stretch to adjournment.

Legislative leaders had tried to negotiate a deal to increase gross receipts, income and cigarette taxes.

Democratic House leaders proposed increasing the cigarette tax by 75 cents a package and have tribal retailers also impose the levy. However, the measure stalled in a committee.

With a budget deal unlikely, lawmakers focused on trying to pass what they considered a must-do financial bill to replenish the state's cash reserves.

The measure will cancel thousands of capital improvement projects to free up $150 million for the reserves. Shoring up the reserves is necessary to ensure New Mexico can cover its expenses this year when cash flow is tight because of monthly fluctuations in tax collections. Ample reserves also help protect New Mexico's bond rating from being downgraded and provide a financial cushion if revenues drop unexpectedly.

Democratic Gov. Bill Richardson has threatened to call a special session as early as next week if there's no budget agreement.

The state faces a budget shortfall next year because revenues dropped as the economy soured and energy prices fell.

New Mexico expects to collect about $5.1 billion in revenues next year — $600 million below spending in the current fiscal year. Lawmakers had planned to use about $200 million in federal economic stimulus money to help cover the shortfall.

The House and Senate disagreed over how much to raise taxes and cut spending next year.

A House-passed budget relied on $300 million in tax increases: a surtax on upper-income New Mexicans and a half-cent increase in the gross receipts tax, which is levied on goods and services.

A budget approved by the Senate used more than $180 million in new revenues. Senators approved bills to reinstate the gross receipts tax on certain foods and a $1-a-pack increase in the cigarette tax.

The more conservative Senate also made deeper budget cuts than the House. However, there was strong opposition in the House to cutting public schools and health care services for the needy.

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The bill to cancel capital projects is SB182.

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On the Net:

Legislature: www.nmlegis.gov