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Thursday, February 25, 2010

State Deficit May Grow by $200M

By Dan Boyd
Journal Capitol Bureau
          SANTA FE — A budget-balancing package being put together by top-ranking New Mexico legislators could feature deeper spending cuts and steeper tax increases than previously thought necessary.
        Senate Finance Committee Chairman John Arthur Smith, D-Deming, and other legislators now believe previous revenue estimates for the budget year that starts in July could be $200 million too high.
        "We just think those numbers are far too aggressive," Smith said.
        That possibility poses problems to lawmakers, who were already struggling to deal with a projected budget deficit for next year of between $500 million and $600 million. Overly optimistic revenue projections would mean the deficit numbers would grow.
        Legislative leaders spent much of Wednesday crunching budget figures in an attempt to lay the groundwork for a budget deal between the House and Senate before lawmakers are summoned back to the Capitol for a special session.
        They'll meet again today and hope to have a budget framework in place by Friday so all 112 lawmakers can hold discussions over the weekend.
        The two chambers were unable to agree on a budget during the 30-day regular session that ended Feb. 18. Gov. Bill Richardson said earlier this week that he intends to call lawmakers back to Santa Fe for a special session that would start Monday.
        Smith said Wednesday there's still no agreement in place as to what types of tax hikes could be enacted to help pay for state spending on public schools and government services.
        "The ones that were in play before are still in play," he said, referring to proposals to increase the state's gross receipts tax rate, impose a sales tax on certain "non-nutritional" food items and enact a surtax on higher earning New Mexicans, among others.
        Another idea being discussed is the Legislature approving a state government hiring freeze, said Rep. Luciano "Lucky" Varela, D-Santa Fe, the deputy chairman of the House Appropriations and Finance Committee.
        Richardson ordered a hiring freeze of his own in November 2008, but the administration has granted dozens of exemptions to the freeze for positions deemed critical.
        Meanwhile, about 60 high school students from around the state gathered at the Capitol on Wednesday to show their support for a cigarette tax increase.
        The Senate approved a temporary $1-per-pack increase in the cigarette tax during the 30-day session — which would generate an estimated $33 million next year — but the bill died in the House during the session's final days.
        Larisa Gearhart, a sophomore at Albuquerque's Amy Biehl High School, said boosting the price of cigarettes could have the added effect of discouraging would-be teen smokers.
        "Teenagers just have this mindset ... they don't want to buy it if it's more expensive," Gearhart said.
       

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