January 31, 2003
Gov. Wants Tax Cut Passed by Next Week
By Barry Massey
The Associated Press
SANTA FE Gov. Bill Richardson wants the Legislature to shift into a higher gear when it comes to his tax-cutting package.
Richardson applied more political pressure to lawmakers on Friday by urging the Senate and House to give final approval to his income tax cut package by the end of next week. The Legislature convened on Jan. 21.
"The Legislature has been in two weeks already. That's enough time to get a package enacted and passed," Richardson said at a news conference.
"So I am asking on their third week, by the end of the week, to have that package on my desk so I can sign it and we can move on to the agenda that we've set forth."
The Senate took steps in Richardson's direction with a procedural fast-track maneuver to immediately advance several revenue-related bills to the Finance Committee so they could be reviewed at a weekend meeting.
Without the move, some of the bills would have been required to follow a slower path by passing through another panel before heading to the Finance Committee, which handles budget and tax issues.
Pending before the Finance Committee is Richardson's proposal to lower personal income tax rates over four years. The governor said he wanted the Senate to pass the measure early next week possibly as soon as Monday and then have the House complete action within a few days.
The governor proposes to cut the top marginal rate of the income tax from 8.2 percent to 5 percent over four years and implement a 50 percent deduction for capital gains.
When fully implemented, his proposal would cost $325 million.
Richardson contends the tax cut will stimulate growth in the economy, generating revenue growth in the future to offset the costs of the tax cut.
To help cover the initial cost of the tax cut, Richardson's budget assumes the state can pick up an additional $50 million in revenues by more aggressive auditing and compliance efforts.
Richardson's package would cost about $21 million in the first year lowering the top marginal rate from 8.2 percent to 7.7 percent.
Because the price tag of the governor's proposal grows with each year of additional rate cuts, some lawmakers question whether the state can afford the heftier reductions that would take effect in 2006 and 2007.
Richardson said he's talking with lawmakers over a possible circuit-breaker provision, which could keep future years of reductions from taking effect if the state's financial situation deteriorated.
Typically, tax cut bills are among the last to move in a legislative session because lawmakers usually approve the budget deciding how much to spend on public schools and general government programs then determine whether there are revenues still available to offset a tax cut.
Richardson wants the Legislature to reverse that process: cut taxes first, then do the budget to divvy up any remaining revenues.
"I think the old style of waiting until the very end to pass bills, in this session where we have so many priorities, is not going to work," said Richardson.
Senate Majority Leader Manny Aragon orchestrated the reshuffling of committee assignments of the revenue bills on Friday. He said the Finance Committee needed to look at the measures together to develop a potential map of the revenue landscape for the rest of the session.
The proposals range from the tax cut package to shifting tobacco settlement revenues into the general budget account and ways of generating more money for Medicaid.
The hurry-up procedural maneuver drew criticism from several lawmakers.
"I object to the fact that the governor and everybody else is going absolutely nuts" trying to move tax cuts and revenue-related bills so quickly, said Sen. Timothy Jennings, D-Roswell. "There are over 50 days left" in the session.
Earlier in the week, the governor began rhetorically whipping the Legislature to act quickly on his proposal to cut income taxes over four years. At the same time, Richardson is wooing lawmakers to support his proposals. He's been meeting with groups of lawmakers and inviting them to dine with him at the governor's mansion.