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Tuesday, February 11, 2003

'Circuit Breaker' Out of Tax Bill

By David Miles
Journal Capitol Bureau
    SANTA FE The Senate Finance Committee on Monday endorsed a state tax-cut package after removing a House-approved provision to prevent it from fully taking effect if New Mexico's fiscal outlook dims.
    Gov. Bill Richardson objected to the House "circuit-breaker" provision.
    The measure, (committee substitute for HB 167, SB 167), goes to the full Senate for consideration.
    House Speaker Ben Lujan, a Santa Fe Democrat and chief backer of the House version of the bill, predicted that the House would not concur with Senate changes to the bill. That would set the stage for negotiations between the House and Senate.
    Lujan said he was not trying to block the new governor's political agenda with the circuit-breaker provision. He said he only wants to protect the state from a potential revenue downturn.
    "We want to support the governor in any which way," Lujan said. "I think that it's also our responsibility to act responsibly."
    The bill would reduce the top state personal income tax rate from 8.2 percent to 5 percent over four years and cut the state's capital gains tax by 50 percent over the same period.
    The proposal would cost $325 million a year if fully implemented.
    The circuit-breaker provision would have delayed enactment of the third year of the package if the state's reserve accounts did not exceed certain levels.
    Senate Majority Leader Manny Aragon, D-Albuquerque, successfully sponsored an amendment to strip the circuit-breaker provision from the bill.
    Aragon said the provision "sends out a mixed message" to businesses considering moving to New Mexico.
    Sen. Leonard Tsosie, D-Crownpoint, who cast the only vote against Aragon's amendment, said he shared House members' concerns that a revenue downturn would follow enactment of the tax cut package.
    Earlier Monday, Richardson said he hoped legislators would send him a tax-cut measure without Lujan's circuit-breaker provision.
    "This circuit breaker really hamstrings me and the state from sending the signal that we're open for new jobs and new business," Richardson said.