SANTA FE – Gov. Susana Martinez on Friday set a budget-balancing special legislative session for later this month, giving her office and leading lawmakers less than three weeks to try to hammer out a deal before legislators reconvene at the Roundhouse.
The two-term Republican governor’s announcement that she had settled on May 24 as the special session’s start date came after weeks of uncertainty, lawsuits and finger-pointing over New Mexico’s budget impasse.
In addition to balancing the budget, Martinez added a proposed overhaul of the state’s gross receipts tax system, the creation of a state “rainy day fund” and regent confirmations to the session’s to-do-list.
“New Mexico faces serious fiscal challenges, and it’s up to us as leaders, not politicians, to address them responsibly – without raising taxes on our hardworking families and businesses,” Martinez said in a statement.
However, top-ranking Democratic lawmakers sounded a wary tone in response to the special session announcement, with some saying there had been no communication from the Governor’s Office about her plans.
“The scarce details provided by Gov. Martinez in her proclamation do not add up,” said Senate Majority Leader Peter Wirth, D-Santa Fe. “New Mexico cannot afford the additional cuts the governor seems intent on making a reality.”
The governor’s decision to issue a special session proclamation without an agreement in place between her office and the Democratic-controlled Legislature opens the door to the possibility of a prolonged, contentious session – which would in some ways be a repeat of this year’s regular session.
It also means a special session will not begin until after the state Supreme Court has heard arguments in a court challenge filed by the Legislature over the governor’s line-item veto of all proposed funding – roughly $779 million in all – for legislative branch agencies and New Mexico colleges and universities.
House GOP floor leader Nate Gentry of Albuquerque said the Legislature will have to shore up the state budget for the fiscal year starting July 1 regardless of the outcome of the court case.
He also said House Republicans are willing to sign off on revenue-generating changes to the state’s tax code, provided they’re part of a comprehensive tax reform package.
“I’m hopeful people will set aside their egos and anger and come up with an agreement,” Gentry told the Journal . “It’s going to take a little political courage to get it done.”
Tax reform deal?
A previous proposal to overhaul the state’s gross receipts tax by eliminating more than 100 exemptions and lowering the base rate stalled in the Senate during this year’s 60-day session due to concerns over its impact.
Rep. Jason Harper, R-Rio Rancho, the bill’s sponsor, has described the tax legislation as a way to get New Mexico out of an “economic death spiral.”
But Rep. Bill McCamley, D-Mesilla Park, who met with Harper last month to discuss the legislation, said there’s no agreement in place and that Democratic legislators have some serious misgivings about the proposal – including the potential reimposition of a tax on food items.
“Anything that is proposed is going to have to be thoroughly analyzed,” McCamley said.
After several rounds of budget cuts in recent years, the Legislature approved a $350 million package of tax and fee increases during this year’s session that was aimed at averting additional spending reductions.
However, Martinez vetoed that legislation, instead proposing cost-savings measures such as making state workers pay more money into their retirements accounts – allowing the state-funded contribution to be decreased accordingly.
Martinez described the tax package as “one of the largest tax increases in state history,” adding, “We need to balance our budget, address our cash crisis, and restore funding for our colleges and universities – without asking families to foot the bill to bail out government.”
But House Speaker Brian Egolf, D-Santa Fe, said Democratic lawmakers will resist additional spending cuts to core state government programs.
“The governor knows, because House and Senate leadership have been clear from the beginning, that cuts to education, health care, behavioral health and important economic development initiatives will not be accepted during a special session,” Egolf said Friday.
He also said he was unsure whether a budget-balancing agreement might be reached, since lawmakers have not seen the details of Martinez’s plan to restore funding for colleges and universities.
This year’s special session will mark the second consecutive year Martinez has summoned lawmakers back to Santa Fe to address the state budget, after calling just two special sessions during her first five years in office.
Last year’s special session – called just a month before the November general election – lasted for seven days and with an agreement on a $371 million solvency package but no accord on three crime bills sought by Martinez.
Per the state Constitution, the governor can set the agenda of special sessions, but lawmakers are not required to act on all issues on a governor’s to-do list.
Special sessions, which can cost up to $50,000 per day, are limited to no longer than 30 days. This year’s special session is not expected to last that long, but without an agreement in place it could stretch on for days.