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Lawmakers debate plan to nearly double tobacco tax

SANTA FE – A proposal to sharply increase taxes on cigarettes and other tobacco products – a move supporters said would help spare public schools from deeper budget cuts – narrowly cleared a critical Senate committee late Tuesday.

The bill now advances to the Senate floor for further consideration, though the Senate Finance Committee made no recommendation on its merits.

A motion to reject the bill failed on a 6-7 vote. A subsequent move to send it to the floor with no recommendation won approval 10-3.

Gov. Susana Martinez, nonetheless, remains opposed to increased taxes and the Legislature is down to its last 10 days to reach a deal on state spending before the session ends.

Democrats hold majorities in the House and the Senate, but Martinez, a Republican, has veto and line-item veto authority over their budget work.

New Mexico has nearly exhausted its reserves and already endured a downgrade of its credit rating. This year’s legislative session, in fact, started with approval of financial solvency measures aimed at ensuring the state could continue to pay its bills through June 30.

Now next year’s budget is the focus of debate.

Sen. Howie Morales, D-Silver City, said his proposal to raise taxes on cigarettes is a sensible way to help shore up state finances. It would have the dual goal, he said, of discouraging people from smoking while also raising about $89 million a year in new revenue.

Senate Bill 231 would increase the taxes on a pack of cigarettes by 90 percent, or $1.50 – from $1.66 to $3.16. It also would raise taxes on other tobacco products, including electronic cigarettes.

The new revenue, Morales said, should be earmarked for operating public schools.

Sen. John Arthur Smith, a Deming Democrat and chairman of the Legislative Finance Committee, suggested it was a difficult vote, among many more to come.

If lawmakers only “made popular decisions,” he said, “this state would have been bankrupt a long time ago.”

The committee vote came after about four hours of testimony from college and school district executives who warned that further cuts, depending on their magnitude, would result in layoffs, loss of accreditation and cuts to athletics.

Rio Rancho Superintendent Sue Cleveland said her district already had trouble finding teachers for 28 classrooms – where students were instead taught by a long-term substitute or a series of substitutes. The applicant pool of teachers is falling fast, she said, even in subjects that used to be easy to fill.

“I can tell you parents in this state are worried about their children’s education,” Cleveland said.

Martinez has signaled a willingness to close tax “loopholes” – perhaps leaving room for new revenue in the budget. But a basic tax increase is out of the question, according to her administration.

“The governor will not raise taxes – period,” Martinez spokesman Chris Sanchez said Tuesday.

She has suggested cutting the take-home pay of government employees, including teachers, to help balance the budget.

Garrey Carruthers, president of New Mexico State University and a former New Mexico governor, told the committee that he was willing to raise taxes when he served as governor, even as a Republican.

“You can’t say public goods (and services) only happen when oil and gas is the right price,” Carruthers said. “The public has to pay for it.”

The full Senate has already supported some tax increases. A bill to raise taxes on gasoline and vehicle sales won approval 29-13 last week, picking up support from three Republicans.