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Democrats challenging governor’s stand on taxes

SANTA FE – As New Mexico lawmakers try to cobble together a state spending plan for the coming year amid plummeting revenues, Gov. Susana Martinez is sticking to a “no tax increase” stance she’s held since taking office in 2011.

In response to the worsening budget situation, several Democratic legislators have in recent days filed bills that call for tax hikes, including a gas tax and a personal income tax increase.

N.M. State Sen. John Arthur Smith

SMITH: Wants to delay cut in corporate tax

Sen. John Arthur Smith, D-Deming, the influential chairman of the Senate Finance Committee, filed two tax-related bills Monday: the proposed gas tax hike and a bill that would delay a pending decrease in the state’s corporate income tax rate for two years.

“It’s really not a tax increase – it’s just delaying the reduction,” Smith said Monday. He said the bill, Senate Bill 252, was prompted by concern about the revenue uncertainty.

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Without a revenue increase, from taxes or another source, some state agencies will likely face budget cuts in the fiscal year that starts in July.

A $6.3 billion spending plan expected to be unveiled today by the House Appropriations and Finance Committee will feature limited spending increases, such as pay raises for State Police officers and corrections officers in state-run prisons.

“A lot of agencies will be pretty flat – there will be a few agencies that take a little cut,” said Rep. Larry Larrañaga, R-Albuquerque, the panel’s chairman.

He also described the spending plan as a “bridge budget” that should carry the state through the coming years’ troubled waters.

Falling oil and natural gas prices have caused state revenue estimates to be pared back twice in the past six months. The most recent estimates, rolled out last week, project that lawmakers will have just $30 million in “new” money to spend in the coming budget year.

New money is the difference between current state spending and money available next year.

Since Martinez took office, lawmakers have enacted several tax breaks aimed at bolstering the state’s economy, including a 2013 tax package that called for the state’s corporate income tax rate to be gradually reduced from 7.6 percent to 5.9 percent.

The two-term Republican governor vowed before her first term that she would veto any proposed tax increases and has not backed off that stance in recent months despite the lower revenue projections.

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“The governor does not support raising taxes on hardworking families and businesses,” Martinez spokesman Chris Sanchez told the Journal . “She is confident we can pass a responsible budget using the same prudent approach we have for years.”

“The fiscal responsibility we have practiced in the past will allow us to deal with the persistently low energy prices we currently face,” Sanchez added.

The governor’s anti-tax stance has meant few tax hike bills have been brought forward in recent years, as lawmakers have recognized such measures would face an all-but-certain veto.

Several tax-related measures are pending this year at the Roundhouse, however. They include:

• A 5-cent increase in the state gasoline and special-fuel excise taxes (Senate Bill 251).

• A tax increase on tobacco products, including e-cigarettes (Senate Bill 77).

n Two proposals to increase personal income tax rates, though one would only apply to the highest-income earners (House Bills 255 and 292).

• Two measures to legalize recreational marijuana use, regulate its production and sale, and tax it (Senate Joint Resolutions 5 and 6, and House Bill 75).

The last tax hike package approved by the Legislature was in 2010, during then-Gov. Bill Richardson’s final year in office. It included an increase in the state’s gross receipts tax and cigarette taxes, and was enacted in response to a sizable projected budget deficit.

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