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Friday, December 11, 2009
Lawmakers: Tax Hikes Not A Sure Thing
By Dan Boyd
Journal Capitol Bureau
SANTA FE — Gov. Bill Richardson has called tax increases inevitable for New Mexico in 2010, but the influential chairman of the Senate Finance Committee isn't so sure.
Sen. John Arthur Smith, D-Deming, the Finance Committee chairman, said many lawmakers from rural parts of the state — both Democratic and Republican — remain wary of raising taxes during tough economic times, despite the state's budget deficit.
"There's no guarantee there's going to be revenue enhancements," Smith said Thursday. "I just don't see an overwhelming vote."
Lawmakers already have reduced general fund spending by about $700 million, from $6 billion to about $5.3 billion, because of steady declines in state tax revenues. Some legislators say there's room for more cuts in the state budget, which grew by 50 percent during Richardson's first six years in office.
During a special legislative session in October, Richardson and legislative leaders agreed not to use tax increases as a way of plugging a $650 million budget deficit.
However, Richardson said last month that tax increases will be "inevitable" in the legislative session that starts in January. He has since assembled business leaders, union heads and community organizers to study more than 30 tax hike options.
Smith said most of the support for tax increases has come from Albuquerque and Santa Fe and legislators who represent those larger New Mexico cities.
"If you go to the Farmington people or the people in my part of the country, where they're closing mines, people say no (to tax increases)," Smith said. "Depending on what part of the state you come from, you get different answers."
While Republican lawmakers, who are outnumbered in both the state House and Senate, have consistently opposed tax increases, Smith's comments reflected similar sentiments among some fellow Democrats.
"I don't think there's going to be as many tax bills as a lot of people think," said Sen. George Muñoz, D-Gallup. "I think there's a lot of cuts to be made."
Recent budget cuts have effectively reduced Richardson's spending increase total from 50 percent to 35 percent, but New Mexico legislators still face a projected revenue shortfall of at least $500 million when they convene for a 30-day session Jan. 19.
Richardson has ordered about 17,000 state employees to take five unpaid furlough days to save the state money, with the first of the furlough days expected Dec. 24.
It's unclear exactly what tax measures will be considered during the coming legislative session, but "sin taxes," or taxes on products such as alcohol, tobacco and soft drinks, will probably be among the possibilities.
Other proposals being discussed by the working group include imposing new tax requirements on out-of-state corporations, placing a surcharge on personal income tax rates for high-earning New Mexicans and repealing a gross receipts tax exemption on food items passed in 2004.
Smith noted that the 70 members of the House will be up for re-election in November and that incumbents could feel political pressure to vote against tax hikes.
However, at least one education union has warned it will target incumbent legislators who vote to further cut public school spending.
Christine Trujillo, president of American Federation of Teachersâ€"New Mexico, said union leaders have been meeting with legislators to let them know they strongly support several tax increase measures.
"There's an expectation public services be maintained," Trujillo said. "I think policymakers sell their constituents short when they say they're not going to raise taxes."
"I think that people are willing to pay their fair share, and now it's time for corporations and rich people to do the same thing," she added.
Some of the largest increases in state spending have been in health and human services, which grew by more than 40 percent since 2003, largely due to rising Medicaid costs, and public safety, which grew by 37 percent during the same period.
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