SANTA FE, N.M. (AP) - Despite resistance from the governor, New Mexico lawmakers pushed forward with a string of tax and fee increases Wednesday during a special legislative session to restore funding for higher education and the Legislature.
The Democratic-led Legislature sent a bill to the governor’s desk that would suspend infrastructure projects and tap severance tax bonds to fill a budget shortfall for the coming fiscal year. Lawmakers outlined additional tax increases to protect the state’s credit rating and stave off further spending cuts to public schools and state agencies.
Two-term Republican Gov. Susana Martinez and the Legislature have been feuding for months over how to fill a budget shortfall for the upcoming fiscal year. Martinez last month rejected a variety of tax hikes, while vetoing $765 million in state spending. Democratic lawmakers unsuccessfully petitioned the state Supreme Court to rescind the governor’s spending cuts.
On the first day of the special session, votes to override the governor’s actions by a two-thirds majority failed in both the House and Senate. Sen. Majority Leader Peter Wirth said the override attempts were necessary to show every effort had been made in case they have to appeal to the state Supreme Court for a second time.
Republican and Democratic lawmakers found some common ground as the House approved proposals to impose taxes on online retail sales, along with nonprofit and government hospitals.
Hospitals support the tax increases because they would bring more federal matching funds for Medicaid to the state.
The plan to suspend infrastructure spending to shore up state finances also earned bipartisan support. Together the measures would raise enough new money to plug a budget deficit for the coming fiscal year and restore a modest financial cushion.
“We think that the governor likes some of these things,” said Democrat Rep. Patricia Lundstrom, from Gallup. “We hope that she will sign some of our revenue suggestions because it’s incredibly important that we get our higher education funding in place.”
The Senate approved tax and fee increases on gasoline, vehicle sales and trucking permits - all of which the governor opposes.
“She’s not going to sign it,” said Sen. Steve Neville, a Republican from Aztec.
Lawmakers voted with reluctance to use $81 million in severance tax bonds to pay for current operations, saying the borrowed money set a bad precedent. That bill cleared the Legislature with just three “no” votes in the Senate.
Without a budget agreement, all general-fund expenditures on the Legislature as well as state colleges, universities and specialty schools are scheduled to run out July 1.
“Priority No. 1, priority No. 2, priority No. 3 - it’s all reinstating funding for higher education,” Wirth said.
New Mexico State University President Garrey Carruthers told lawmakers Wednesday that a failure to reach an agreement would bankrupt the Las Cruces-based school in a matter of months.
New Mexico’s finances were hit hard over the past two years by a downturn in revenue from the oil and natural gas sectors. The state also struggles with a weak overall economy and the nation’s highest unemployment rate.
The budget crisis has triggered tuition increases at several colleges, layoffs at museums and a shortage of public defenders.
Martinez has cast blame for the shortfall on the Legislature’s own spending habits, though its $18 million annual budget accounts for a small fraction of spending.
She and allied House Republicans favor clawing back $12 million in pension funds set aside for lawmakers. Critics say that would take a bite out of savings for all government workers and trigger tax penalties.
The governor backed a proposal to do away with a variety of tax breaks. A vote on that tax package was scuttled by Democratic House Speaker Brian Egolf because lawmakers were not given enough time to study it.
If vetoed funding is restored and there’s no agreement on any new sources of revenue, the state would be left with an estimated $70 million deficit that could translate into cuts to public schools and state agencies - and a possible downgrade of its credit rating.
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