Lawmakers pass budget, revive 1% raises as session nears end

SANTA FE — With the clock ticking toward adjournment, New Mexico lawmakers on Wednesday put the final touches on a $11.1 billion spending plan and a tax package that would provide $10,000 tax credits to doctors practicing in the state.

In a final flurry of lawmaking before the 30-day session ends Thursday at noon, the House moved to restore a 1% pay raise for state employees and teachers that had been stripped out of the budget bill by a Senate committee.

The raises were affixed to a tax bill, Senate Bill 151, that won final approval late Wednesday, when the Senate voted to agree with House changes to the legislation.

"They are necessary to help working families keep up with the rapidly increasing cost of living today," said Rep. Derrick Lente, D-Sandia Pueblo, after a House Taxation and Revenue Committee meeting.

The raises were affixed to a tax bill, Senate Bill 151, that won final approval late Wednesday, when the Senate voted to agree with House changes to the legislation.

Dozens of other bills were also approved Wednesday, including a $11.1 billion budget bill that would increase state spending by about $277 million — or 2.6% — over current levels.

Gov. Michelle Lujan Grisham will have until March 11 to act on the budget bill and all other measures passed in the final days of this year's session.

The governor lauded legislators on Wednesday for passing some of her top legislative priorities, including a hotly debated medical malpractice bill and a measure codifying her universal child care initiative in state law.

The medical malpractice bill, which is aimed at stabilizing rising insurance premiums and improving health care access, was approved late Wednesday by the Senate following a bipartisan vote to strip out amendments that critics said had weakened the legislation.

"This is a giant step toward solving our doctor shortage in New Mexico, and it's going to lead to better health outcomes for patients because they won't have to wait so long to see a doctor," said Lujan Grisham, who had previously vowed to call lawmakers back to Santa Fe for a special session if they did approve medical malpractice legislation.

The governor, who is in her final regular session after taking office as governor in 2019, also hailed the Legislature's approval of a bill making it easier to pursue court-ordered treatment for individuals deemed to pose a threat to themselves or others.

Similar attempts to pass such involuntary civil commitment legislation had stalled in previous sessions at the Roundhouse.

"I'm deeply grateful to the members of the Legislature who worked so hard to get these measures across the finish line," Lujan Grisham said. "These weren't easy lifts. They required months of negotiation, good faith and a willingness to put New Mexicans first."

Some bills remain in limbo

While some high-profile measures won legislative approval, others fell by the wayside at the Roundhouse in the session's final hours.

Sen. Crystal Brantley, R-Elephant Butte, said a bipartisan bill to change the state's criminal code for juvenile offenders, Senate Bill 165, would not be voted on by the full Senate before the session's end.

That would mark the second consecutive year that no legislation dealing with juvenile crime had won approval from lawmakers, despite support from the governor and top state law enforcement officials.

Meanwhile, eight interstate compact bills dealing with counselors, physical therapists and other professions remain stalled in the Senate late Wednesday after having passed the House. Two additional interstate compact bills — dealing with doctors and social workers — were among a batch of fast-tracked bills signed by the governor on Feb. 5, but the remaining compact bills have struggled to advance.

One proposal that appeared to have better odds of passing was a relief package targeted at three New Mexico counties — and the communities within them that house federal immigration detention centers — that passed the Senate on Wednesday and was awaiting action in the House.

The bill, Senate Bill 173, was crafted in reaction to the Immigrant Safety Act, which was signed by the governor this month and may close the immigrant detention sites in rural New Mexico. It would provide $10.5 million in stopgap funding to counties and municipalities that rely economically on detention centers. 

"I'm afraid of my district turning into a ghost town," said Rep. Stefani Lord, R-Sandia Park, whose district includes the Torrance County Detention Facility in Estancia, one of three facilities.

Tax breaks and pay hikes 

The biggest surprise on the session's penultimate day came during the House tax committee's meeting on an omnibus tax package approved by the Senate just three days earlier.

Instead of adding additional tax breaks, House Democrats instead tacked onto the bill the pay raise for state workers and educators that will cost the state an estimated $62.7 million in the coming budget year. The revised tax package then passed the House late Wednesday on a 43-19 vote.

House Speaker Javier Martínez, D-Albuquerque, called the move a "creative" approach to ensuring public employees do not go without a raise for the first time since 2018.

The tax package would raise an estimated $111.5 million in annual revenue for the state by decoupling the state's corporate income tax from several components of a federal budget bill signed by President Donald Trump last summer.

Revenue generated by the corporate tax change would effectively be used to pay for the salary increases and about $51 million in tax credits and deductions. Local governments could also see an impact on their gross receipts tax collections.

Republican lawmakers objected to the corporate tax shift during Wednesday's debate, saying it would undermine attempts to make New Mexico more economically competitive. Other states like Colorado and California have already moved to decouple parts of their tax code from the federal changes, according to the National Conference of State Legislatures.

"We need to have a focus on whether we're going to put ourselves at a competitive advantage with the states around us," said Rep. Joshua Hernandez, R-Rio Rancho.

The tax breaks in the bill include a $10,000 personal income tax credit for full-time New Mexico physicians, which would begin next year and last through 2031. Also included are two tax breaks for local news organizations — one for newspapers printed in the state and the other for employing local journalists.

Journal staff writer Gillian Barkhurst contributed to this report.

Dan Boyd covers state government and politics for the Journal in Santa Fe. Follow him on X at @DanBoydNM or reach him via email at dboyd@abqjournal.com.