Lawmakers sign off on budget, capital outlay bills, but tax package still in limbo

SANTA FE — With the 60-day legislative session entering its final days, lawmakers signed off Thursday on a $10.8 billion spending plan and a $1.2 billion package of public works projects.

But a high-profile tax package that could provide expanded personal income tax breaks for roughly 100,000 New Mexicans remained in limbo at the Roundhouse after the Senate stripped a proposed oil tax increase from the bill.

When a House committee last week brought forth a tax bill that would eliminate personal income taxes for some working-class people, the revenue hit of the plan was largely offset by the proposed new surtax on the severance and sale of oil.

The proposed 0.28% surtax would generate about $130 million in the 2026 budget, covering the loss of about $72 million expected from the income tax proposal.

A Senate committee then added to the bill about $70 million in tax credits and breaks for foster parents, volunteer first responders, health care practitioners and more.

But the full Senate voted Thursday to remove the oil surtax from the tax package before passing the bill on a 36-1 vote. The lone dissenting vote was cast by Sen. Ant Thornton, R-Sandia Park.

Sen. Carrie Hamblen, D-Las Cruces, said the senators made their change — proposed by Senate Minority Leader William Sharer, R-Farmington — after “a great deal of discussion” and conversations with “multiple entities.”

In response, Rep. Derrick Lente, D-Sandia Pueblo, the tax package’s initial architect, asked the House later in the day not to agree with the Senate changes to the bill, since it would no longer be revenue-neutral.

The House’s subsequent vote not to accept the Senate changes could prompt a conference committee in the final hours of this year’s session, in which appointees from both legislative chambers would meet to try to hammer out a compromise.

The House assigned Lente, Rep. Cristina Parajón, D-Albuquerque, and Rep. Mark Duncan, R-Kirtland, as their appointees, but the Senate had not voted on whether to back away from its amendments or chosen its appointees as of late Thursday.

If the appointees from the two chambers are able to reach a deal, both the House and Senate would have to adopt the conference committee’s report in order for the bill to advance to Gov. Michelle Lujan Grisham’s desk.

But the budget and capital outlay bills are already headed to the Governor’s Office.

The Senate voted 25-16 on Thursday to approve the capital outlay bill, with Republicans voting in opposition due to the governor’s inclusion of a $10 million earmark for the construction of a new reproductive health care clinic in northern New Mexico.

As for the $10.8 billion budget bill, the House voted with little debate Thursday to sign off on the Senate’s changes to the legislation, which included adding $100 million to seed a new state behavioral health trust fund.

Lujan Grisham will have until April 11 to act on both bills.

The governor also has the line-item veto authority to strike certain spending initiatives or budget language from the two bills.