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Budget woes cast shadow over 60-day legislative session

Copyright © 2017 Albuquerque Journal

SANTA FE – When New Mexico lawmakers convene at the Roundhouse on Tuesday for the start of a 60-day legislative session, they’ll be greeted by new faces in top leadership positions and a sticky budget morass that’s already prompted sweeping spending cuts.

Fresh off a bruising election season in which all 112 legislative seats were up for election and several prominent incumbents were either ousted or did not seek re-election, leaders in the House and Senate will also face cries to raise the state’s minimum wage, increase criminal penalties and overhaul the state’s system for handling ethics complaints.

But the budget situation will cast the longest shadow.

Senate Majority Leader Peter Wirth, D-Santa Fe, who was elected by his colleagues to fill the post long held by Michael Sanchez of Belen, an election casualty, said fixing a projected $69 million budget deficit for the current fiscal year – with cash reserves all but depleted – and crafting a spending plan for the coming year will require bipartisan compromise and all his mediation and listening skills.

“I’ve gotten lots of congratulations, and I’ve gotten lots of condolences,” Wirth said of his new leadership post. “It’s certainly challenging.”

While the election was a rough one for Democrats nationally, Democrats in New Mexico expanded their majority in the Senate and will enter the session with a 26-16 advantage over Republicans. They also reclaimed control of the House – after just two years of GOP control – and will have a 38-32 edge in that chamber.

Rep. Javier Martinez, D-Albuquerque, said getting a state economy that has one of the nation’s highest jobless rates on the right track will be a top priority for House Democrats.

He also said he’d like to see changes in the state tax code, which critics have described as containing too many credits, deductions and other carve-outs. Several tax measures are expected to be debated during the session, including a proposed overhaul of the state’s gross receipts tax system.

“I think that now that we have a majority in the chamber again, that’s something we need to focus on,” Martinez told the Journal .

However, House Minority Whip Rod Montoya, R-Farmington, said Republicans are wary of Democratic-backed tax hike proposals, saying higher tax rates would hurt the state’s economy.

Montoya also expressed opposition to several Democratic proposals to raise the state’s minimum wage, currently set at $7.50 per hour.

Although Albuquerque, Santa Fe and Las Cruces are among the New Mexico cities that have enacted higher local minimum wages, the state base wage level has not been adjusted since 2009 and is now lower than that of at least two neighboring states, Arizona and Colorado.

“If we start to raise the minimum wage, more and more businesses are going to start to replace people with kiosks,” Montoya said.

Solvency package

This year’s 60-day session is expected to begin with more urgency than usual, as top-ranking lawmakers and Gov. Susana Martinez have called for quick action on a solvency package to address the current budget year deficit.

In a speech last week to Albuquerque business leaders, Martinez said she wants to see a “serious solvency package” hit her desk before any other bills are approved by the Legislature.

But the two-term Republican governor, who will deliver her seventh State of the State address Tuesday, has urged lawmakers not to divert money from job-training programs and other economic development initiatives backed by her administration in order to accomplish the task.

“Businesses that come to New Mexico need to know there’s predictability,” Martinez said in her speech last week.

Meanwhile, influential Senate Finance Committee Chairman John Arthur Smith, D-Deming, predicted there will be stiff opposition to at least one part of the governor’s budget plan, a proposal to trim the take-home pay of roughly 22,000 state employees – plus teachers – by making them pay more money into their retirement accounts so that taxpayer-funded contributions can be decreased.

Smith, who also tangled with Martinez’s predecessor, former Democratic Gov. Bill Richardson, over funding issues, said lawmakers are going to have to “scrape every corner” to solve the current budget crisis.

“Obviously, the first priority is the solvency package,” he said, adding that he would like to see a $250 million package that could bolster state reserves. “I would like to move quickly on a solvency package, assuming we can get each chamber to agree.”

While the governor has vowed to veto any tax hike bills, Sen. Carlos Cisneros, D-Questa, the vice chairman of the Senate Finance Committee, said proposals such as increasing the state’s gasoline tax rate and prodding online retailers to collect gross receipts taxes would help balance the budget without overly hurting most New Mexicans’ pocketbooks.

“She should support them and allow them to go through,” Cisneros said.

Other potential revenue-generating measures include making New Mexico the eighth state to legalize and regulate recreational marijuana use – both a law change and a constitutional amendment on pot have been proposed – and doing away with a state subsidy for cities and counties that enacted local tax increases under the terms of a 2013 state tax package.

GOP measures

With Democrats controlling both chambers of the Legislature for the final two years of Gov. Martinez’s second term, GOP-backed education bills and efforts to increase criminal penalties for DWI offenders and others could face long odds.

But the governor has vowed not to change course despite the new political landscape, saying last week, “I have two more years, and I will fight to the end for our kids, our public safety and for those who have invested their own money (in businesses).”

Ethics-related bills could also generate hearty debate, as several recent public corruption scandals – including the resignations of former GOP Secretary of State Dianna Duran and Democratic state Sen. Phil Griego – have sparked renewed interest in the idea of creating a state ethics commission, or a similar body, to investigate complaints against elected officials.

Meanwhile, Martinez’s relationship with the new Democratic legislative leaders, specifically Wirth and Rep. Brian Egolf, D-Santa Fe, who’s poised to become the next speaker of the House, could be a key plotline to the session.

The governor frequently clashed with former Senate Democratic floor leader Sanchez – a political committee run by Martinez’s adviser spent big bucks on ousting him from the Legislature – and has shown few signs of acquiescing on top Democratic priorities such as increasing the minimum wage.

With Democrats now holding a majority in both legislative chambers, they could send more bills Martinez opposes to the governor’s desk and try to override her vetoes, a tactic that’s been largely avoided in recent years.

Wirth said he met with the governor a couple of weeks ago, for just the third time in six years.

“I wouldn’t say there’s a huge relationship there, but I wouldn’t say the doors are shut,” he told the Journal . “I think it’s really important we try to keep every channel of communication open.”

Journal Capitol bureau reporter Deborah Baker contributed to this report.

 

 


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