N.M. lawmakers OK $200 million tax increase package

By Barry Massey: The Associated Press

SANTA FE — The state Legislature approved a measure Wednesday to raise taxes by more than $200 million next year to help balance the state budget, the largest tax increase package in more two decades.

Passage of the measure moved lawmakers close to the finish line of a politically charged special session that focused on a state budget and tax increases to pay for government operations in the coming year.

The tax measure cleared its final hurdle in the Legislature when it passed the House 38-28. It goes to Gov. Bill Richardson, who will have 20 days to decide whether to sign or veto it. The Senate had approved the proposal a day earlier.

The bill included a one-eighth cent increase in the state’s 5 percent gross receipts tax on goods and services. New Mexicans also will resume paying a tax on food, which will average about 2 percent statewide.

The last critical pieces of a budget-balancing package awaited a vote in the Senate: a $5.6 billion budget and a bill to increase the cigarette tax by 75 cents a pack. Both proposals have passed the House and will go to Richardson if the Senate approves them without change.

Debate on the tax measure previewed what could become campaign themes in this year’s elections. All 70 House seats are up for election.

Republicans said the Legislature should deeply cut spending to balance the budget rather than raising taxes during a recession.

“We’re talking about hundreds of dollars to individual taxpayers who, by the way, I think are hurting more than state government right now,” said House Republican Whip Keith Gardner of Roswell, who opposed the tax increases.

“People are being laid off. People are losing their jobs,” said Gardner. “But yet we’re ready … to say, ’Hey, go ahead, impose a little bit more, we just want to keep government whole. We want to keep the beast alive and keep it moving forward.”

House Speaker Ben Lujan, a Santa Fe Democrat, said tax increases were necessary to prevent crippling cuts in government services and “if we’re going to have a functional educational system, a health system that addresses the needs of all of our citizens.”

The House and Senate conducted a legislative chess match on Wednesday as they tried to coordinate work on several bills forming a compromise budget and tax package.

The Senate waited to consider the budget and cigarette tax proposals until it was clear whether the House — with its splintered Democratic majority — could muster enough votes for the $200 million in tax increases. The food tax is unpopular with many Democrats because they contend it will fall heaviest on low-income New Mexicans.

Rep. Al Park, an Albuquerque Democrat, said he disliked the food tax but supported the tax measure as a compromise to resolve budget problems.

“Some of the things I like. Some of the things I hate. But the point is we need to try to spread the pain among all segments of our society, to make sure that we are all participating in solving this challenge,” said Park.

Richardson called the Legislature back to work on Monday because lawmakers failed to agree on a budget during a 30-day session ending last month.

According to the Legislative Council Service, one of the largest tax packages in New Mexico history came in 1986 when income, gross receipts and other taxes were raised by $150 million — representing nearly 11 percent of the state budget then.

The proposed tax increases of more than $230 million are equal to more than 4 percent of next year’s proposed state budget.