Budget Bill and Tax Bills on House Calendar Again Today
NEA-New Mexico and other public employee unions
representatives have been working hard to help get enough votes
(probably all Democrats) to pass the budget and necessary tax bills.
After much discussion and debate in public and behind closed doors, it
appears that there is a compromise within the Democratic caucus in the
House to move the budget and revenue bills today. The fourth
revenue measure was added to the mix after much discussion with House
leaders in a hastily called meeting of the House Taxation and Revenue Committee yesterday afternoon.
The vote to approve that measure, House Bill 270, was along party lines, Democrats voting to provide
revenues for public schools and public employees, Republicans voting
against the interests of schools and employees.
We continue to be cautiously optimistic that
enough votes are there for passage of the Budget and necessary
revenues bills when the House convenes at 9:00 AM this morning. Stay tuned!
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Representatives This Morning
House Approach Needed to Avoid Cuts and Salary
Decreases
The budget, House Bill 2, the General Appropriations Act has been crafted in
concert with revenue increases to prevent major cuts to public schools
or the salary and benefits of public employees. While not all we could wish for, the proposed House budget for Education
avoids the salary and massive program cuts proposed by the Legislative
Finance Committee before the legislative session. The measure includes $2.5 billion
in state and federal aid for public education next year. That's a
slight decrease of about one-half percent over this year's total spending on
schools, the Public Education Department and other education programs.
It is clear that these budget recommendations will depend on lawmakers
raising taxes. If we are successful in getting this measure out of the
House, the picture in the Senate still looks bleak. We must
immediately turn our efforts to influencing Senators to break with
some leaders and vote for tax increases to fund public schools.
New Mexico (like most other states) has been relying on federal economic stimulus money to
avoid deeply cutting public schools during the recession. About $210
million in federal aid will go to schools this year, replacing state
tax money that otherwise would be needed for education. However, the
federal money is going away. Schools would get about $24 million
in federal stimulus aid next year (all that's left after this year's
funding). An increase of $165 million in state aid fills the gap
left by federal funding available this year, but not next year. The
budget as proposed provides these funds without further cuts to public
schools.
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Representatives This Morning
Four Important Revenue Bills on House Calendar Today
A fourth revenue measure was added to the list of House revenue bills
yesterday.
The four revenue measures described below are on the House
calendar for today and will be heard on the House Floor. The passage of these three
measures is necessary if we are to keep education funding intact and
avoid the pay and other cuts originally proposed by the Legislative
Finance Committee.
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Representatives This Morning
The four measures are:
House Bill 9, sponsored by committee chair Representative Ed
Sandoval. Under the proposed legislation, personal income tax
rates would be increased by 1.5% percent on taxable income in excess of
$200,000 (married joint and head of household filers), $133,000
(single) and $100,000 (married separate). The increase would apply
only in tax years 2010 through 2012. It would provide, as amended in
the committee to a 1.5% surtax, some $66 million
to the general fund next year.
A committee substitute for house Bill 119, TEMPORARY GROSS RECEIPTS INCREASE, sponsored by Speaker
Ben Lujan. The
substitute fixes some concerns that cities and counties had with the
bill. House Bill
119 temporarily increases the state gross receipts and
compensating tax to 5.5 percent in FY11, 5.375 percent in FY12, 5.25
percent in FY13, 5.125 in FY14 and returning the tax to the current 5
percent rate in FY15 and beyond. The measure raises $238 million
next year and $189 million the year after that. This goes
a long way toward raising the funds needed for public education.
House Bill 120, TAX WITHHOLDING CHANGES,
also sponsored by Speaker Lujan. This bill would raise some $16 million by
requiring out of state residents to pay taxes owed on mineral
royalties earned in New Mexico by forcing the pass-through entities
that collect the royalties to withhold the taxes; the measure imposes
no new taxes and forces compliance with existing law.
House Bill 270, ADD BACK CERTAIN TAX DEDUCTIONS, sponsored by Representative
Mimi Stewart, generates some $90 million in new revenue next year
and about $70 million dollars in new revenues per year after that.
New Mexico currently allows the same itemized deductions as allowed
for federal income tax purposes, including the deduction for state and
local taxes. Deductible taxes include income taxes, property taxes
and, under certain circumstances, sales taxes. The federal deduction
can be justified as a way of cost-sharing for the cost of state and
local government services. The justification for allowing the same
deduction for state income tax purposes is not good tax policy.
House Bill 270 amends the definition of “net income” in the Income Tax
Act to subtract the amount of state and local taxes from the
taxpayer’s itemized deductions. The result is that state and local
taxes will be added back into net income for the purposes of
determining tax liability.
The four measures provide nearly $400 million in new
revenues to be added to the general fund to prevent further cuts to
education and prevent salary cuts to all public employees.
Without these bills the proposed House budget simply cannot be passed.
Budget and Tax Bills Must Move Together
At least $300 million in new funding must come from some combination
of House Bill 9, House Bill 119, House Bill 270, and House Bill 120 as
the budget bill is passed in order to provide a budget that does not
cut public schools and public employee salaries. Please ask all House Members to support both a budget that does not cut education
and the necessary revenue bills to support that budget!
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Education Partners' Poll on school funding and revenues
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