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SANTA FE – An impasse between the House and Senate on an $8.5 billion spending plan was resolved Wednesday, sending the bill on to Gov. Michelle Lujan Grisham for final consideration.
With the clock ticking toward the end of this year’s 30-day legislative session, lawmakers also signed off on an $827.7 million public works package and advanced to the brink of approval a broad tax package aimed at boosting the state’s economy and helping New Mexico nurses, parents and retirees.
A day after the two chambers butted heads over specific items in the budget bill, a conference committee made up of House and Senate members hashed out an agreement to eliminate funding for hydrogen energy hubs and delete budget language making law enforcement officer recruitment bonuses contingent on passage of a broad crime package.
But a House-backed attempt to add $30 million to the budget bill to aid rural hospitals was blocked by Senate members, even though the idea is supported by Gov. Michelle Lujan Grisham’s administration.
“We didn’t get everything, but we got our main ideas,” Rep. Patricia Lundstrom, D-Gallup, told reporters after the Wednesday conference committee meeting at the Roundhouse.
She also said she would continue working on legislation providing a framework for hydrogen energy development in New Mexico, after several bills on the issue stalled during this year’s 30-day session amid staunch opposition from environmental groups.
This year’s budget bill would boost state spending to record-high levels for the fiscal year that starts in July, as an oil and gas-powered revenue boom has given lawmakers the ability to increase New Mexico starting teacher pay to $50,000 annually and provide state employees with hefty pay raises.
In all, the budget bill would boost state spending by about $1 billion – or nearly 14% – over current levels.
Among the changes to the bill agreed upon Wednesday were adding $5 million to the bill to ensure there’s enough funding to establish a $15 per hour minimum wage for state workers and education employees. The budget also provides for an average 7% salary increase for teachers and state employees.
In addition, conference committee delegates agreed to reduce a $125 million earmark for hydrogen hubs around the state to $50 million. That money would not be available for hydrogen power plants, but instead could be used for public-private partnerships to construct or improve broadband infrastructure.
Budget impasses between the House and Senate are rare but not unprecedented at the Roundhouse.
In 2018 and 2019, the House refused to agree with Senate budget amendments, but the two chambers worked out their differences by the end of the session.
Tax breaks in limbo
Meanwhile, a $546 million package of tax breaks was on the verge of final approval as legislators neared adjournment.
The Senate voted 39-0 just after midnight Thursday morning to approve the tax package legislation, House Bill 163, that would reduce the state’s gross receipts tax rate by 0.25% and exempt Social Security retirement income from taxation up to a certain income amount.
It would also enact an annual income tax credit of up to $175 per child, among other provisions.
But the bill was amended in a Senate committee Wednesday, meaning it must still go back to the House for a decisive concurrence vote.
One of the biggest changes was tacking on a $250 tax rebate for all New Mexico adults who make less than $75,000 annually. Married couples filing jointly with an adjusted gross income of less than $150,000 per year would get a $500 tax rebate.
That boosted the cost of the package to an estimated $546 million in the coming fiscal year – or more than the $400 million set aside for tax changes in the budget bill.
Rep. Christine Chandler, D-Los Alamos, told Senate Finance Committee members during the Wednesday evening meeting it’s unlikely the House would agree to the changes to the bill, though that position could soften as the session enters its final hours.
“It’s our view (the rebates) would not be terribly effective,” said Chandler, adding the tax spending could exacerbate inflation issues.
But backers insisted the tax rebates would be worthwhile. The Senate committee also amended the bill to phase in the gross receipts tax cut over the next two years.
“A rebate is the least we could do for New Mexico families given the glut of government growth we have seen this year,” said Sen. William Sharer, R-Farmington.
Sen. George Muñoz, D-Gallup, the committee’s chairman, expressed displeasure at the last-minute changes, saying senators were moving at “warp speed” with adjournment looming.
“This is not the way we should be doing tax policy in New Mexico,” Muñoz said.