Thursday, March 25, 2010
Lawmakers Grumble As Gov. Axes Food Tax
By Sean Olson
Journal Staff Writer
SANTA FE — New Mexico legislators chafed at Gov. Bill Richardson's veto Wednesday of a renewed tax on food, which averts a controversial tax hike but also eliminates $68 million meant to help balance the state's $5.6 billion budget.
Legislators, who approved the food tax as part of a more than $230 million tax increase and budget plan during a special session earlier this month, complained that the second-term Democratic governor simply delayed tough decisions on fixing state finances until after he leaves office at the end of the year.
"This governor has never been known for doing something responsible. He's known for doing things that are politically popular," said Senate Finance Committee Chairman John Arthur Smith, D-Deming.
Richardson, who sought the repeal of the food tax in 2004 and on Wednesday called renewal of it cruel, said he wouldn't sign it back into law "during the worst financial crisis New Mexico has ever experienced."
"I'm not about to open the door again and resurrect a tax on food that disproportionally hurts poor and middle class families," Richardson said.
Richardson signed other tax increases Wednesday to raise a total of about $170 million for balancing the budget, including an eighth-of-a-cent increase in the state's gross receipts tax on goods and services, a personal income tax hike for about one-fourth of New Mexico taxpayers and a cigarette tax hike.
Any budget gap left by the food tax veto could be closed if necessary by dipping into cash reserves, employing $20 million in federal stimulus money and cutting state agency spending as a last resort, the governor said.
Also, while signing a 75-cents-a-pack tax increase on cigarettes, Richardson vetoed earmarks on the use of that revenue and said the action would restore $13 million to state general fund accounts and help bolster reserves.
Richardson freed up about $18 million for the general fund with line-item vetoes in the state budget, which he signed Wednesday with some minor, additional changes.
Lawmakers intended that the $230 million-plus in new tax revenues they adopted would be used to balance the state budget, whose plus side has been undermined by drops in revenue from personal income taxes and natural gas and oil revenues.
Republicans on Wednesday renewed their objections to a state budget that they say does not have deep enough spending cuts, which they said should be made before any taxes are increased. Democrats criticized the governor for what they call a fiscally irresponsible plan based on overly optimistic revenue projections.
Smith said there are indications that state revenues will not meet projections, meaning the general fund reserves could be short by this summer.
House Minority Whip Keith Gardner, R-Roswell, said the governor's plan avoids making necessary cuts to the budget, which will end up causing more financial problems for the state next year.
"He gets to keep spending money like a drunken sailor. That ought to make him happy," Gardner said.
Some lawmakers had said Richardson did not have the authority to veto the food tax because his line-item veto authority extends only to appropriations. But Richardson said state lawyers said he was within his constitutional rights.
"I don't see anybody challenging that, but, of course, that is a possibility," said House Speaker Ben Lujan, D-Santa Fe.
Another concern for legislators has been the possibility of another special session to readjust the budget due to diminishing state revenues.
Senate President Pro Tem Tim Jennings, D-Roswell, said the state could most likely make it until the next regular legislative session in January before adjustments had to be made. But if revenues dropped, the Legislature could have to reconvene in the fall.
Richardson also had his share of support for the food tax veto. Representatives from the nonprofit group Think New Mexico, the AARP and the Catholic Church all praised the governor's action.
Richardson said feedback his office had received about the tax had been "overwhelmingly" negative, although he did hear some support for reimposing the tax from the state's business community.