Legislature Adjourns without Budget
Compromise
The Legislature adjourned at noon Thursday with no
state budget for next year. Governor Richardson has
announced that he is calling the Legislature into special session on
Wednesday, February 24, to deal with the Budget crisis.
The whole process began to unravel when the House Taxation and Revenue Committee rejected a
proposed increase of the state's cigarette tax. Committee members
voted 7-8 against a revised bill that would have raised the tax on a
pack of cigarettes by 75 cents, from the current rate of 91 cents to
$1.66 per pack.
The tax, which would have generated more than $30 million in the upcoming
year, was opposed by all six committee Republicans. Democratic Reps.
Ernest Chavez of Albuquerque and Andrew Barreras of Tome also voted
no.
The measure was apparently part of the set of legislation that legislative
leaders were trying to make part of a compromise tax package.
It's failure along with the intransience of Senate leaders
toward other revenue measures probably doomed the compromise
efforts.
Under normal circumstances the budget and revenue battles
would have been carried in a conference committee between the House
and Senate.
Since, under new rules adopted last legislative session,
conference committees must meet in open session, both chamber's
leaders appeared reluctant to create one until a budget deal was
actually reached. Closed door meetings in the House
Speaker's office and in the Governor's office attempted to
reach a compromise to no avail.
House and Senate Budget Plans Differed Widely
House Bill 2, the General Appropriations Act, passed the
Senate early Sunday morning; the Senate recessed at about 2:00 AM. The voting coalition that passed it was interesting. Many Democrats who usually
support the budget, voted no in protest of the cuts to public schools
and other vital state services; several Republicans who usually vote
against the budget voted yes to give the measure a 25 to17 passage.
The Senate version of House Bill 2 had deep cuts when compared to the House version.
It had some $87 million fewer dollars for public education. The
line items in the bill its self cuts some $53 million from State
Equalization Guarantee (SEG), the portion of the budget that supplies
most operational costs in public schools and $3 million dollars
from other public school costs. The rest of the cut came in the
form of a "sanding" provision in the bill that simply cuts
(sands) l.43% from
every line item in the budget.
The plan was supported with a
cigarette tax, a change in gross receipts tax on food, Senate Bill 10 — a reinstatement of the state's gross
receipts tax, or sales tax, on a wide range of food items, including
white bread, macaroni noodles and certain tortillas. The vote on this
measure is available at this link. Many of the progressive Senators' votes were
against the concept of raising taxes on food, not against funding
education. Again enough Republican crossover gave the measure its
23-19 coalition for passage.
The other piece of the Senate revenue plan was $16 million from House Bill 120. sponsored by House Speaker Ben Lujan, D-Santa Fe,
that would ratchet up income tax compliance on out-of-state residents.
The rest of the House revenue package — a temporary increase of the
state's gross receipts tax base rate and a surtax on high-earning
state residents —has been tabled in the Senate Corporations and Transportation Committee.
We supported the House version of the budget with some
$83 million dollars more for public schools than the Senate version, including some $20 million
for employee health care costs to prevent more benefit decreases.
The House version would have allowed school districts to operate in a
reasonably normal manner. The proposed House budget for
Education avoided the salary and massive program cuts proposed by the
Legislative Finance Committee before the legislative session.
The measure included $2.5 billion in state and federal aid for
public education next year.
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 can only 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 in the
proposed House Budget filled the gap
left by federal funding available this year, but not next year. The
House budget would haveprovided these funds without further cuts to public
schools.
The Senate version would have required cuts, maybe even
cuts in staffing levels. House Bill 9, House Bill 119, and House Bill 120 are the tax bills that supported the House version of
the Budget. The votes on these bills are at this link. The three measures
would have provide more than $300 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.
Contact Legislators at Home
Legislators will return to their districts until the
special session begins on Wednesday. Make every effort to
contact them there with the simple message--no more cuts to public
education and enough new revenues to fund the state budget. A
balanced approach is needed. We already had $700 million
dollars in cuts to the budget, now is the time to balance the budget
with new revenue!
We will update with details about non-budget legislation next week as we
begin updates for the special session.
Education Partners' Poll on school funding and revenues
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