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Legislature adjourns; special session likely

SANTA FE – A topsy-turvy 60-day legislative session dedicated largely to New Mexico’s state budget crisis lumbered to a close Saturday with Gov. Susana Martinez accusing lawmakers of failing to do their job – passing a balanced budget.

She vowed to veto a tax increase proposal and call the Legislature back into special session to try again, though she did not say when that might happen.

“What a waste of time,” Martinez, a two-term Republican, said of lawmakers’ work.

Democratic leaders in the House and Senate, in turn, said they sent the governor a financial package that would avoid additional spending cuts and restore the state’s financial health, if only she would sign it.

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The proposals include a $6.1 billion spending plan for the coming year, about $350 million in tax increases to help pay for it and a bill that would begin making changes to New Mexico’s gross receipts tax code.

“We passed a budget, a revenue bill and tax (overhaul) package – all three with overwhelming bipartisan support,” Senate Majority Leader Peter Wirth, D-Santa Fe, said after the session ended. “In my opinion, this has been an extremely productive session – in fact, one of the most, if not the most, in the 13 years I’ve been in the Legislature.”

Some lawmakers urged Martinez not to call lawmakers back to Santa Fe for a special session too quickly.

“I think we need to take a break, look at what were the sticking points and start talking,” said Rep. Jason Harper, R-Rio Rancho.

New Mexico lawmakers have had to return to the Capitol for budget-related special sessions shortly after adjournment before.

In 2010, then-Gov. Bill Richardson called legislators back to Santa Fe less than one week after they failed to reach a budget agreement.

Other issues

Aside from the budget acrimony, lawmakers addressed some perennially troublesome issues.

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They approved a measure to create an independent ethics commission to investigate allegations of misconduct levied against state officials, lobbyists and others. The proposed constitutional amendment goes before voters in the 2018 election.

Although details of the commission’s day-to-day operations would still have to be figured out by legislators if the proposal wins voter approval, backers said its passage marked a “historic day” for New Mexico.

“I am pleased that the voters of New Mexico will have an opportunity to decide on the creation of an independent ethics commission,” said Rep. Jim Dines, an Albuquerque Republican who helped craft the legislation.

Other approved high-profile bills include:

• New limits on the small-loan loan industry, an effort supporters said would help protect low-income consumers from being trapped in a cycle of debt.

• A requirement of more campaign finance disclosures for “dark money” groups.

• Two proposed increases in New Mexico’s $7.50-per-hour minimum wage. Martinez indicated Saturday that she would not sign them, however, saying the proposed wage levels were too high and would hurt the state’s economy.

Meanwhile, several bills vetoed by Martinez in the session’s final week could be headed for court. Top-ranking Democratic lawmakers say five of the governor’s vetoes should be ruled invalid because the governor did not state her objections to the measures within a set time period.

But Secretary of State Maggie Toulouse Oliver’s office has indicated it will not move forward on enshrining the vetoed bills into state law without direction from the courts, and Martinez defended her actions Saturday.

“They’re vetoes; they’re absolutely vetoes,” the governor said. “My objections were based on constitutional law that allows me to do those vetoes.”

Budget

But it was the budget that dominated much of the session in a state with the nation’s highest jobless rate.

Lawmakers began the session in January by passing a solvency package aimed at plugging a budget gap in the current fiscal year’s budget, and ended it by wrestling over ways to properly fund state government for the budget year that starts in July.

Democratic leaders said they hoped Martinez would propose a new budget package, if she ultimately rejects theirs.

House Speaker Brian Egolf, D-Santa Fe, said House and Senate leaders were more or less in agreement on the budget almost two weeks ago. But they held off sending it to the governor – at her request, he said – because they were trying to reach a deal that would win her support, too.

“The communication between the Legislature and the executive was constant,” Egolf said.

Unable to reach agreement, they sent her the plan they’d adopted. It won broad bipartisan support in the Senate but passed on party lines in the House.

And Sen. John Arthur Smith, a Deming Democrat and chairman of the Senate Finance Committee, said some of the governor’s initial ideas – such as reducing state employee take-home pay – didn’t pick up support even among Republicans in the Senate.

However, Martinez specifically accused legislators of knowingly passing budget and tax increase bills they knew she opposed.

“Many in the Legislature failed to do their jobs,” Martinez told reporters. “I will never allow lawmakers to raise taxes on our families in order to bail out government spending.”

The governor also said she has directed her administration’s central budget office to begin studying a partial government shutdown, which could include state park closures and state employee furlough days.

But it was unclear exactly when that might be rolled out, or whether it was a threat aimed at getting more cooperation from lawmakers.

Smith said the closure of state government shouldn’t be necessary. The budget debate at hand focuses on the fiscal year that begins in July, he said.

“I do believe she can limp along until the end of June,” Smith said.

The governor has vowed to veto any tax increases approved by lawmakers, but she suggested she would consider measures generating revenue for the state coffers if they were part of a significant overhaul of the state’s tax code.

Tax overhaul

One measure that could be key to resolving the budget impasse during a special session is a Martinez-backed tax overhaul bill sponsored by Harper that passed the House but stalled in the Senate during the session’s final days due to concerns about its impact.

The bill called for the elimination of more than 100 gross receipts tax exemptions, which would allow for the state’s base rate to be lowered.

Although the measure was designed to ultimately be revenue-neutral, Harper said it could generate as much as $100 million for the state’s coffers in the coming budget year if certain provisions were enacted before the rest of the bill.

But Democrats objected to some parts of the bill, including the proposed reimposition of a tax on food items that was stripped out before the measure passed the House.

Senate Democrats also suggested the bill was flawed, but they ultimately incorporated some of its elements into a separate tax overhaul measure. They said it was better to move cautiously and make only a few changes at a time, rather than all at once.

That prompted criticism from House Minority Whip Rod Montoya, R-Farmington, who said the bill would have been the “most significant taxation reform bill in 50 years.”

But Harper indicated he hasn’t given up hope on the legislation becoming law.

“I still remain very hopeful,” Harper said Saturday. “I don’t think the sun is setting on New Mexico.”

What lawmakers did (and didn’t)

A look at proposals that passed and failed during the 60-day session that ended Saturday. Gov. Susana Martinez has until April 7 to act on legislation approved by lawmakers in the session’s final days

Budget/taxes
Passed: Raising $350 million in new revenues from taxes and fees on gasoline and diesel sales, vehicle sales, trucking permits and nonprofit hospitals while delaying reductions in corporate income taxes; funding of $6.1 billion for the coming fiscal year that boosts spending slightly on public schools and the judiciary and cuts funding for state colleges; maintaining spending on public safety and economic development subsidies.

Failed: Far-reaching tax reform plan designed to improve the business climate by sweeping away an array of tax breaks that would dramatically increase state revenues from nonprofit organizations such as hospitals and health clinics; increasing taxes on tobacco products and electronic cigarettes to fund education; restoring taxes on food; hiking taxes on junk food.

Business/labor

Passed: Raising minimum wage to $9.25 an hour and prohibiting further restrictions on employers who don’t provide advance notice of work hours to employees; raising minimum wage to $9 an hour from $7.50 with an $8 training wage for the first two months of employment; capping interest on payday loans at 175 percent.

Failed: Capping interest on payday loans at 36 percent; prohibiting mandatory union dues; legalizing and taxing recreational marijuana.

Crime/public safety
Passed: Barring gun possession for those under permanent restraining orders in domestic violence cases; banning solitary confinement for pregnant or juvenile inmates; redacting names of rape and stalking victims from public release until a suspect is charged.

Failed: Requiring background checks on most private firearms transactions; banning alcohol from repeat drunken drivers; reinstating the death penalty for killers of law enforcement officers, corrections officers and children.

Education
Passed: Limiting the use of restraint and seclusion in schools; requiring statewide rules to prevent bullying in public schools; providing a 16-month grace period for students to qualify for a legislative lottery tuition scholarship.

Failed: Expanding early childhood education by tapping into the Land Grant Permanent Fund; allowing teachers to take more than three days of annual sick leave without affecting their performance evaluations; suspending the creation of new charter schools until 2020.

Ethics/transparency
Passed: Creating an independent ethics commission with approval from voters in a statewide ballot initiative scheduled for November 2018; identifying donors to independent political groups that spend unlimited amounts of money to influence New Mexico elections.

Failed: Funding for an overhaul of the state’s public website for campaign finance disclosures.

Health/family
Passed: Allowing workers to use sick leave already provided by employers to care for sick and aging relatives; outlawing the practice of “conversion therapy” to change a young person’s sexual orientation or gender identity.

Failed: Allowing doctors to help terminally ill patients to end their lives legally; imposing a tax on sodas by excluding carbonated beverages from the definition of “food.”

Environment
Passed: Creating a fund for restoration of state trust lands damaged by oil spills, wildfires, illegal dumping and more; pursuing contracts for rooftop solar on state buildings to save electricity costs over time with no up-front public investment.

Failed: Increasing the amount of renewable energy supplied by investor-owned utilities and cooperatives; extending tax credits for household rooftop solar energy systems.

National issues
Passed: Ensuring access to contraceptives at no personal cost as provided under the federal Affordable Care Act.

Failed: Preventing state law enforcement agencies from enforcing some federal immigration laws; prohibiting state cooperation on construction of a wall on the border.

Memorials
Passed: Allowing the issuing of green and red chile license plates.

Failed: Making the green chile cheeseburger the state’s official cheeseburger; designating “Chile Verde Rock” as the state’s official chile song; declaring “Gracias New Mexico” as the official state winter holiday song; adopting “La Marcha de los Novios” as the official dance of New Mexico.

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