“Politicians who are not economists are starting to second-guess (the forecast) without any real understanding,” Martinez told the Journal on Friday.
To ease some lawmakers’ concerns that the new money might not come, Martinez said, she wants to create new revenue trigger points that would mandate her proposed tax cuts and incentives if fiscal year 2013 revenues are in line with estimates her administration and lawmakers already have agreed on.
One key lawmaker, however, said triggers aren’t the answer.
The forecasts of $250 million in new revenue, made by both legislative and executive branch economists, has sparked debate from legislators on both sides of the aisle. Critics now say low natural gas prices, driven by excess national supply, could tank the budget by dramatically cutting the production taxes the state receives.
“What we’re willing to do is say, ‘Let’s put triggers in, just like when the unions wanted a trigger if we didn’t reach revenues over a certain amount then they would pay more into their pension,’ ” Martinez said.
The governor was referring to a deal struck last year with public employee and teacher unions that required state workers to contribute an extra 1.75 percent of salary to their pensions until the state exceeded $100 million in new revenues.
Martinez said some of the doubt could be rooted in Democrats’ attempts to thwart her proposed tax package. The package includes proposals to promote New Mexico business by cutting gross receipts taxes for about 40,000 small businesses, offset some taxes for the manufacturing and research and development industries and eliminate so-called “tax pyramiding,” in which some companies are double- or triple-taxed on products being produced for sale.
The governor and Finance and Administration Secretary Tom Clifford on Friday defended the revenue projections, saying natural gas futures markets suggest prices will improve and that money from gas production represents just one small piece of the state’s general fund.
“It seems like playing with, or second-guessing, the projection is in order to not have to look at that … to have tax reform, although Democrats also have made proposals,” Martinez said.
John Legislative Finance Committee Chairman John Arthur Smith, a Democratic senator from Deming, has raised concern about potential effects of natural gas prices, which are near 10-year lows during the winter season.
Smith said Martinez’s proposed trigger points for new tax policies might create more harm than good by sending businesses the message of economic insecurity.
“I have some real problems with the trigger points, the message it sends to business,” Smith said. “It’s unlike the pension thing. In theory, she’s trying to recruit and expand businesses. … My concern is once you do that with the tax package, then you’re communicating uncertainty to whoever you’re trying to expand or recruit.”
Martinez said she has received some signs of support from other lawmakers in discussions about possible revenue trigger points that mandate tax policy changes.
“We talked to the leadership (Thursday), and I think we might be able to come to some sort of agreement,” Martinez said.
— This article appeared on page A1 of the Albuquerque Journal