SANTA FE, N.M. (AP) - Democratic legislators announced a push for new sources of income for New Mexico state government on Thursday through taxes on nonprofit hospitals, internet sales, trucking permits and vehicle registrations, in an effort to avoid further cuts to government services and spending.
Democratic leaders in the House of Representatives said the package of tax measures could raise an additional $214 million during the fiscal year beginning in July to plug a budget gap and rebuild depleted reserves.
House Speaker Brian Egolf warned that the alternative would be drastic spending cuts of 2 percent or more involving education and Medicaid health care - the two largest areas of state general fund spending.
Key provisions of the House tax package would apply a $90 annual permit tax on trucks crossing through the state, up from the current $5 payment, and eliminate some tax deductions for nonprofit health care providers.
Republican Gov. Susana Martinez has steadfastly opposed tax increases and called for further belt tightening by state government, but also indicates she may agree to close some tax loopholes. She gave the Democrat-backed proposals a cold reception on Thursday, through a spokesman.
“The Governor is open to true tax reform, but she will not let lawmakers bail out Santa Fe on the backs of our families,” said Michael Lonergan, a spokesman for the governor.
Amid a downturn in the local oil sector, New Mexico has slashed spending during the current fiscal year at most agencies and swept cash from school district reserves and other government accounts to fix a current-year budget deficit and restore modest reserves.
Lawmakers say they need an additional $125 million in state revenues to sustain current government spending for the fiscal year starting in 2018. More is needed to protect the state’s credit rating, they say.
Rep. Larry Larranaga, the ranking Republican on the House Appropriations and Finance Committee, voiced support for Democrat-backed initiatives that would collect taxes on internet sales by out-of-state retailers such as Amazon and remove tax deductions for nonprofit medical providers.
He also wants the state to shore up the general fund by forgoing capital spending next fiscal year. Democrats say that idea is unworkable and have spurned a proposal from the governor to conserve money by lowering government contributions to pensions for state workers and public school employees.
Sen. John Arthur Smith, D-Deming, who is sponsoring a companion bill in the Senate to reduce health-sector tax deductions, said lawmakers are striving for budget remedies that won’t be vetoed.
“We’re hoping we can satisfy the executive branch and the health care providers who have sort of stepped up and said, ’Hey, if we can leverage more federal Medicaid dollars, we’re willing,’” he said.
Republicans and Democrats are sponsoring several proposals to increase the state’s gasoline tax to shore up the general fund and increase spending on roads and highway infrastructure.
Smith, the chairman of the Senate Finance Committee, said negotiations are underway to unite Democrats and Republican behind a single gas tax bill.
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