SANTA FE, N.M. (AP) - The New Mexico House of Representatives approved plans Wednesday to increase state revenues by $250 million, hold state spending steady and rebuild a financial cushion despite opposition from Republican lawmakers.
House Democrats pushed through the budget and a companion revenue bill on 37-32, party-line votes. The financial plan maintains general fund spending at $6.1 billion for the fiscal year starting in July.
New Mexico government is wrestling with stunted state revenues linked to a downturn in the oil sector and a sluggish local economy. To balance the budget, the House approved increased taxes and fees on hospitals, car buyers, trucking businesses and online sales by out-of-state retailers.
An initial provision to tax sales by nonprofit groups was eliminated Wednesday.
The budget blueprint now moves to the Democrat-controlled Senate. Republican Gov. Susana Martinez has voiced fundamental differences with the budget plan. She has veto authority over both bills and can delete spending provisions line by line.
The revenue bill’s sponsor, Rep. Carl Trujillo, D-Santa Fe, said the state needs to leave behind a “cut, cut, cut” approach to balancing its books.
“We are bleeding so what we need to do is stop the bleeding here,” he said. “I think that it is the responsible thing to do for New Mexico.”
Legislative analysts say the state requires $125 million in new revenues in order avoid new budget cuts, before it can add to depleted reserves.
The House-approved budget would increase classroom spending on K-12 education through a per-student formula by $32 million, with no overall increase in public school funding. Several performance-based grant programs backed by the governor would be cut.
Funding to the judiciary would rise by 2.5 percent. State courts have struggled this year to pay for juries and meet staff payroll. The increases extend to the Office of the Public Defender, where some attorneys have said they are too overloaded with cases to provide adequate representation to poor defendants facing jail time.
The Corrections Department budget would increase slightly, while funding would decrease by 1 percent for the Higher Education Department and state colleges and universities. State investment income would offset general fund cuts to specialty schools for the deaf and blind.
A lingering deficit for the current fiscal year was plugged in January by the Legislature and Gov. Susana Martinez by sweeping money from school district reserves and other government accounts. Spending across state agencies was slashed by 2.4 percent during a special legislative session in October, with much larger cuts at most agencies.
Martinez has criticized the House budget plan as disconnected from New Mexico’s values. Republican lawmakers raised objections to targeted cuts to educational initiatives and admonished Democratic colleagues for proposing tax increases during hard economic times - but stopped short of proposing their own overall spending cuts.
“This is really a tax increase as opposed to a tax reform,” said Rep. Jason Harper, R-Rio Rancho, during the House debate. “The truth is we don’t have to raise taxes even to have a flat budget. There are other options.”
House Republicans suggested savings through construction-project delays, temporarily reductions in tax credit payments to New Mexico’s film industry and reduced subsidies to a state health insurance pool for the severely ill.
Both parties largely support applying taxes to internet sales and raising money by reducing tax deductions for nonprofit hospitals and health care practitioners.
State economists say the health care sector is one of the bright spots on the New Mexico economy but goes relatively untaxed.
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