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11th-hour tax deal ends session

SANTA FE — New Mexico lawmakers steered their 60-day legislative session to a dramatic finish Saturday, approving a sweeping tax package that Gov. Susana Martinez promised to sign into law.

The tax package, which looked unlikely before being cobbled together during the session’s final hour, will likely decrease state tax rates — especially for businesses —but could raise the tax burden on cities and counties.

“Today, we beat the buzzer,” the governor said. “It wasn’t a victory for one political party or for another — it was a victory for New Mexico.”

However, a high-profile measure that would have required background checks for private firearm sales at gun shows died Saturday on the Senate floor, as opponents dragged out debate on the bill until the session’s end, preventing a final vote.

Senate Majority Leader Michael Sanchez, D-Belen, said the statewide discussion about dealing with gun violence will continue despite the defeat of House Bill 77.

Sanchez said the bill was not put on the floor until the session’s final half-hour because the emotional debate it prompted would have blocked other legislation from getting through.

“This bill will come back,” Sanchez said. “It won’t end today.”

The hectic end to the legislative session — and the tactics used to hurry the tax package through both the House and Senate — left some progressive Democrats fuming.

“We got a corporate income tax (cut) shoved down our throat,” said one of them, Rep. Mimi Stewart, D-Albuquerque, who described the last-minute tax package as a “royal screw-job.”

“That bill will cost the state hundreds of millions of dollars. We were not allowed to discuss it,” Stewart said.

Martinez, who had previously threatened to veto the $5.9 billion budget endorsed by lawmakers, said Saturday that she would instead sign the bill — with some partial vetoes — after the last-minute tax package gained approval.

She also said she would not call the state’s 112 part-time lawmakers back to the Capitol for a special session.

“Overall, I am satisfied with the outcome,” Martinez said. “I would not have said that, however, 72 hours ago. Unlike Washington D.C., we do not stop talking when we have disagreements.”

Anatomy of a tax plan

Senate Minority Leader Stuart Ingle, R-Portales, said the details of the tax plan were hashed out during Friday night discussions between top-ranking lawmakers and staffers from the Governor’s Office.

He said that tweaks could be made to the tax breaks in future years, but that the package could jump-start the state’s sluggish economy.

“It’s something that I think is really going to help with our recruiting of businesses and companies,” Ingle said.

Meanwhile, Sen. John Arthur Smith, D-Deming, estimated the tax package would close roughly $500 million in tax loopholes.

Gov. Susana Martinez holds a news conference after the Legislature adjourned Saturday. Behind her is Tom Clifford, secretary of the Department of Finance and Administration. (Eddie Moore/Albuquerque Journal)

Gov. Susana Martinez holds a news conference after the Legislature adjourned Saturday. Behind her is Tom Clifford, secretary of the Department of Finance and Administration. (Eddie Moore/Albuquerque Journal)

“I think this is the closest thing we’ve had since I’ve been here to true, total tax reform,” said Smith, a fiscally conservative seven-term lawmaker who chairs the powerful Senate Finance Committee.

House Speaker Ken Martinez, D-Grants, said the tax proposals included in the last-minute plan were previously considered by House committees in separate legislation so the composite plan introduced on the House floor during the final minutes of the session was not a major surprise for many lawmakers.

“That workout on the tax package had been started on the first day,” Martinez said.

Budget provisions

State spending will increase for the second straight year under the $5.9 billion budget that Martinez said she will sign into law.

The budget includes a 1 percent pay raise for state employees, including teachers, and a 4 percent salary hike for certain law enforcement officers. State workers have not received a base pay raise since 2008.

The governor said Saturday that she will review the budget carefully and might line-item veto some appropriations.

“It’s not a perfect budget,” she said. “It doesn’t give us all the tools we need to truly reform our education system and focus the system on our kids.”

Overall, state spending would increase in the coming fiscal year by $246 million — or 4.4 percent — from this year’s levels under the budget approved by lawmakers. Public school spending would make up nearly half of the increased spending.

On to the governor

All told, nearly 300 bills were passed by the Legislature during the 60-day session and sent to the governor’s desk for approval, according to an unofficial tally.

Gov. Martinez has until April 5 to act on bills sent to her desk during the session’s final three days.

Bills passed by the Legislature and sent to Martinez’s desk for final approval include proposed solvency fixes for the state’s two large public retirement systems.

Sen. John Arthur Smith, D-Deming, left, and Senate Majority Leader Michael Sanchez, D-Belen, on the Senate floor after the end of the session ended Saturday. Behind them is Dan Lopez, president of New Mexico Tech. (Eddie Moore/Albuquerque Journal)

Sen. John Arthur Smith, D-Deming, left, and Senate Majority Leader Michael Sanchez, D-Belen, on the Senate floor after the end of the session ended Saturday. Behind them is Dan Lopez, president of New Mexico Tech. (Eddie Moore/Albuquerque Journal)

Martinez was noncommittal Saturday about whether she would sign the bills, which would use a mix of higher contribution levels and retirement benefit cuts to keep the pension funds afloat.

“I’m going to have to look at it very carefully and look at how solvent they are and who the burden would fall upon,” she said.

Lawmakers also passed measures aimed at overhauling a pair of scandal-ridden state agencies: the Public Regulation Commission and the New Mexico Finance Authority.

Martinez has voiced support for legislation passed to establish a state-run health insurance exchange to create a market for people or small businesses to shop for health insurance plans under the federal Affordable Care Act. Under the bill sent to her, the exchange would be overseen by a 13-member board that includes the state superintendent of insurance, along with six members appointed by each the governor and legislative leadership.

Action was needed during this year’s session to comply with federal rules requiring state insurance exchanges be capable of accepting buyers by October.

Martinez is also expected to sign into law legislation to extend liability protections for spacecraft part manufacturers and suppliers based at the state’s Spaceport America, near Truth or Consequences.

Supporters, including spaceport tenant Virgin Galactic, said the bill to shield parts manufacturers from some lawsuits filed by space travelers was necessary to lure new commercial space companies to relocate their businesses to the $209 million spaceport.

The Legislature also passed rules to ensure open government. Public boards, including city councils or county commissions, would be required to publicly post meeting agendas at least 72 hours in advance. Currently 24-hours notice is required.

Wage objection

The Governor’s Office has promised to veto an increase in the state minimum wage.

Democratic lawmakers highlighted a bill to increase the state’s minimum wage to $8.50 an hour among their successes. The state’s $7.50-per-hour minimum wage was last increased in 2009.

Martinez, however, called the minimum wage increase a “gimmick” that would make New Mexico noncompetitive with neighboring states where minimum wages are lower.

House Republicans during debate of the minimum wage increase proposed a minimum wage hike to $7.80, matching Arizona, but that option was rejected. Martinez said a $7.80 minimum wage was her office’s effort to compromise.

Left in the dust

Among the issues that withered at the Roundhouse was an effort to change the way New Mexico issues driver’s licenses to illegal immigrants, which failed for a fourth consecutive session.

The governor, who has urged lawmakers to repeal the 2003 law, rallied behind a bill this year that would have created a two-tiered licensing system. A late attempt to revive the bill by skipping it out of a committee where it was tabled fell short.

Also failing to gain traction was Martinez’s effort to end the so-called “social promotion” of third-graders who can’t sufficiently read, while increasing intervention programs also failed this year’s legislative session. Democratic alternative plans to increase funding for student remediation programs without mandating third-grade retention also fell short.

In addition, a strong push by Democrats to send to voters a constitutional amendment to increase distributions from the state’s Land Grant Permanent Fund to 6.5 percent per year to fund early childhood education programs failed.

The proposal died in the Senate Finance Committee, where the chairman said the increase annual distributions by more than $110 million per year would cause irreparable damage to the state’s $11.45 billion permanent fund for education.

Several proposed long-term changes to improve solvency of the state’s struggling Lottery Scholarship Fund also failed to pass. However, the legislature adopted a one-year solution to shore up the fund for the 2013-2014 academic year by transferring $10 million state’s Tobacco Settlement Permanent Fund.

More on the 2013 Legislative session

— This article appeared on page A1 of the Albuquerque Journal

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