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Done deal for tax breaks, repair projects

SANTA FE – New Mexico lawmakers moved quickly Monday to approve big-ticket infrastructure and tax incentive bills, reviving legislation containing millions of dollars in spending that appeared dead at the end of this year’s 60-day regular session.

Monday’s single-day special session was the product of weeks of negotiations among Senate and House leaders and Republican Gov. Susana Martinez.

“I think bipartisanship is alive and well – so Washington, take heed,” Senate President Pro Tem Mary Kay Papen, D-Las Cruces, said at the end of Monday’s session.

It took less than 4½ hours for the House and Senate to pass and send to the governor three bills that negotiators had worked out.

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“If you agree on something, it makes it easy,” said House Speaker Don Tripp, R-Socorro.

Martinez told reporters that Monday was a “good day for New Mexicans and their families.”

“We worked really hard before we called a special session to come to an agreement, so we could … just go through the process and get out of here,” she said.

The big capital projects bill – $295 million for projects around the state, including highways – and a smaller measure plugging holes in state agency budgets passed each house unanimously.

The package of tax breaks passed the House 60-2 and the Senate 31-11.

“I don’t see any jobs in this tax package,” Senate Majority Leader Michael Sanchez, D-Belen, who voted against it, told the Journal .

But business groups, which pushed hard for the legislation, said it would make New Mexico more economically competitive.

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And Gov. Martinez said the seven tax credits in the package “show the rest of the country and the world that we’re open for business.”

The $295 million capital projects bill – $31 million more than the previous bill that died in the regular session – includes $45 million for highways. How to pay for the roadwork had been a sticking point; negotiators agreed to use both state bonds and cash reserves.

Also in the legislation is money for universities, senior centers, water and sewer projects, schools, state facilities, and hundreds of other improvements in communities statewide.

Local governments had joined the business community in pressing for the special session to salvage those projects.

The bulk of the money, $212 million, will come from severance tax bonds to be issued by the state, beginning this month.

The bill for state agencies appropriated money for the special session, as well as $4 million for the Department of Health and $300,000 for the Administrative Office of the Courts.

The Health Department recently told the Legislature it was facing a $6 million shortfall for the budget year that ends June 30, partly because of the high cost of contracting for nurses in state health facilities.

The looming shortage “left a giant hole in this year’s budget,” Senate Finance Chairman John Arthur Smith, D-Deming, told his colleagues. “It was a shortfall that had to be filled.”

The Administrative Office of the Courts needs the money for magistrate court operations in the current budget year. Martinez had vetoed $750,000 from the courts budget after the regular session, and the state Board of Finance recently rejected a funding request from the AOC.

The tax package contains a series of tax breaks, many of them expansions or extensions of existing incentives. Finance and Administration Secretary Tom Clifford told lawmakers the cost to the state would be at least $6.5 million a year once the package is fully implemented.

Democrats in the House and Senate objected that the tax bill didn’t include the extension of a solar tax credit, which the Legislature had passed in the regular session and Martinez vetoed. The credit expires next year.

Sen. Mimi Stewart, D-Albuquerque, called it a “missed opportunity” for an industry that in New Mexico numbers more than 60 companies and employs 1,600.

“I know the 63 businesses have been all scratching their heads since March, when the solar credit was vetoed,” Stewart said.

House Democrats tried to get the solar credit tacked onto the tax package, but it failed on a party-line vote.

The tax package included the re-enactment of a tax deduction for out-of-pocket medical expenses that tax officials said has been used by about 300,000 New Mexicans annually.

It had been provided for years, but it was recently determined it wasn’t properly on the books.

Majority Leader Sanchez said he and his colleagues who voted against the tax bill had good reasons for doing so. He said he hoped it wouldn’t be used against them in next year’s legislative campaigns – or prompt the governor to veto items from the capital outlay bill as retribution.

Martinez said projects in the bill will be scrutinized based on funding level, job creation and economic impact.

“There was never an agreement that there would never be a veto in the capital (outlay bill). It won’t be any different this year than any other year,” she told reporters.

But she also said she will not use line-item vetoes as retribution, saying, “I have never done it, and I don’t intend to start.”

Speaker Tripp said he didn’t foresee Monday’s votes turning into a campaign issue.

“It doesn’t seem like a big political football to me. It’s pretty benign,” Tripp said.

Top-ranking lawmakers and the Governor’s Office had held off-and-on talks for weeks about the possibility of a special session, after the $264 million projects bill died on the final day of this year’s 60-day legislative session.

That bill’s demise was due largely to philosophical and political disagreements over funding for highway work.

Local government officials and business leaders pressed hard for the session, claiming the legislation would bolster a New Mexico economy that has lagged behind those of neighboring states in growth measures.

Prospects for a special session appeared dim three weeks ago, after negotiations fizzled and Martinez said she had “no intention” of calling lawmakers back to Santa Fe.

However, the talks quietly resumed in recent weeks and quickly picked up steam, leading to last week’s announcement of a deal.

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