A budget, but no breakthrough
Martinez indicates she’ll sign measure to stave off financial crisis, but vows to veto tax increases
Senate Democratic Whip Michael Padilla, talking to reporters immediately after the New Mexico Senate recessed Thursday, may have hit the nail on the head in describing this week’s special session of the Legislature: “If you feel like you are watching a movie for the second time, you’d be correct.”
Indeed, the special session has had a strong sense of déjà vu. Lawmakers this week voted to restore funding for the state’s higher education system and the legislative branch of government, which Republican Gov. Susana Martinez had stripped from a budget passed in March — a controversial move that was condemned by state university presidents and led legislators to file an unsuccessful legal challenge in the state Supreme Court.
And while Martinez signaled Thursday she would sign the latest budget legislation, there was no breakthrough on the fight over revenue measures that Democrats say are necessary to shore up the state’s dwindling general fund but that the two-term Republican governor says would amount to making New Mexicans pay to bail out government.
“Overall, I’m pleased that we were able to come to an agreement on the budget,” she said.
But she added, “Let me be clear: I will veto all tax increases that hit my desk. The legislative leadership knew that from the beginning and chose to pass these tax hikes regardless.”
As they recessed Thursday, giving Martinez until Monday to act on the bills before legislators return to the Capitol on Tuesday, lawmakers seemed to have averted a budget crisis if only for a few months.
The impasse over the budget could mean New Mexico starts the new fiscal year in July with a spending plan that is balanced and includes funds for its universities but leaves little money in the government’s reserves. That, in turn, could lead creditors to downgrade the state’s bond rating or lead to yet another financial crisis like last year’s, when revenue shriveled as oil and gas prices tanked.
Democrats this week pushed through bills to raise taxes, which mostly mirror legislation approved earlier this year but would still leave reserves below what many lawmakers would prefer.
So while the state’s finances may not slide into the red, leading Democrats warned of further financial struggles for the state if the governor continues to oppose all tax proposals.
“If we don’t have any changes in revenue, we’re looking at having to increase class sizes — making the jobs of teachers even harder — less funding for K-12 education, less funding for student financial aid,” Speaker Brian Egolf, D-Santa Fe, told reporters after the House recessed Thursday afternoon.
The revenue measures include raising the tax on gasoline by 5 cents a gallon, an increase in the tax on vehicle sales and a higher fee for commercial truck permits.
Martinez has said she will not support raising taxes without an overhaul of the gross receipts tax code. But Democrats and some GOP lawmakers countered that her favored tax reform legislation — a 430page bill — was too dense to ram through a special session expected to last just a few days.
House Republicans stood by the tax-reform demand, arguing lawmakers on both sides of the aisle recognize the need for tax reform and accusing Democrats of merely being unwilling to grapple with the issue.
“We have almost made kicking the can down the road the standard operating procedure in this Legislature,” said Rep. Larry Larranaga, R-Albuquerque.
Senate Finance Committee Chairman John Arthur Smith, D-Deming, told reporters that the Legislature had compromised with Martinez by accepting her plan to take money from bonds sold to finance brickand-mortar projects and use the cash to shore up the state’s general fund.
“We had to swallow a tough pill,” Smith said. “The executive branch was wanting to use … bond money to Band-Aid this forward. … That was an attempt to reach out and give the governor something that she’d requested.” But, even though he voted for using the bond money, he said he believes it “is not responsible when you’re coming to the budgeting process.”
Without a breakthrough on tax reform or tax increases, it is unclear what, if anything, lawmakers can expect to accomplish by returning to the Capitol next week.
House Minority Leader Nate Gentry of Albuquerque said Republicans would not support an override of the governor’s vetoes and would only back revenue measures if the Legislature agrees on tax reform.
The gridlock left some lawmakers wondering why the governor called the session without first having an agreement in place.
Egolf said he has not spoken with Martinez in the special session. Smith said earlier in the week that he agreed the governor might have scheduled the session to fend off possible court action on the legal challenge to her vetoes, allowing her lawyers to argue before the courts that all options had not been exhausted for resolving the state’s budget predicament.
Even some Republican lawmakers were frustrated that the governor called a session without agreements in place.
Legislators agreed to forgo their daily pay of $164 until Tuesday, and leading lawmakers expressed hoped the session would not drag.
“It’s time for this crisis to be over,” Senate Majority Leader Peter Wirth of Santa Fe said. “And we’re hopeful we’ve taken that step.”
Contact Andrew Oxford at 505-986-3093 or aoxford@ sfnewmexican.com. Follow him on Twitter @andrewboxford.
Contact Steve Terrell at 505-9863037 or sterrell@sfnewmexican.com. Read his political blog at www.santafenewmexican.com/ news/blogs/politics.