Special Session Ends with New Revenues, Education
Cuts
Compromise Tax Package
The Senate and House have approved a compromise tax package, Senate Bill 10, generating some $200 in new revenue from an
1/8 percent increase in gross receipts taxes (GRT), removing the
state's compensation to municipalities and counties for the GRT on
food (thus, requiring them to reinstitute the tax themselves if they
want to maintain the revenue), a compensating tax on internet sales,
and the removal of the deduction of state income taxes from those who
itemize their state income tax filing. The measure also increases the
low income tax rebate for the poorest New Mexicans raising from
$22,000 to $24,000 the income level of those eligible for the rebate;
this was done to offset the increase in taxes for those New Mexicans.
Cigarette Tax Last Piece in Budget Compromise
New cigarette taxes were the last piece needed to fill in
the revenue gap between the Senate Tax Bill and the House Budget Bill.
The Senate spent most of the afternoon debating House Bill 3 to raise cigarette taxes by 75 cents per pack.
The measure passed out of the House with an amendment crafted by Representative Andrew J. Barreras and Representative Sandra Jeff to require that one third of the
increase (some $11 million) be dedicated to increasing the state
equalization guarantee for public schools.
But the Senate Finance Committee early Thursday
re-directed the $11 million to two separate areas, with $4.6 million
going to the state pre-kindergarten programs administered by the state
Public Education Department and $6.4 million going to early childhood
programs administered by the Children, Youth and Families Department. Senator Eric Griego tried unsuccessfully to extend the timeframe of the funding for two
years, keeping a full $11 million for schools and early childhood.
The bill returned to the House for concurrence after the Senate had
already adjourned. Some House members urged colleagues to vote
against adopting the Senate changes as cuts to education funding,
which would have effectively killed the cigarette tax. The House had
no choice if they wanted the revenue in the budget except acceptance
of the Senate changes, which passed by a 40 to 20 vote.
Senate Finance Committee Refuses to Hear House
Measure to Hold Public Schools Harmless from Cuts
Earlier in the day, the Senate Finance Committee absolutely refused to hear Representative Jim R. Trujillo's House Bill 6, worked out with several
progressive Representatives, including Representatives Trujillo, Egolf, Stewart, and Miera,
and the House leadership. It would have added $25 million to the state equalization
guarantee by redirecting funds from the severance tax away from
support for bonds and pork to offset the cuts in House Bill 2. If the Senate had considered and adopted this bill
and the entire package of taxes and the House Bill 2, the cut to the
basic operating funds for public schools should be nearly zero! This
would not have raised a penny in new taxes; it simply used already
available funds in a different manner for one year.
Democrats in the House tried to hold education harmless
from the cuts described below. Senator John Arthur
Smith and the Senate Finance Committee made a very real and deliberate effort to
cut public school funding rather than redirect severance tax money to
public schools! Unfortunately it's the House members who tried so hard
to avoid cuts who have to run for re-election this November; it's up
to us to make sure that the tax increases they supported to prevent even
further cuts to education don't defeat them. As for Senator Smith and
his committee, they don't seek re-election until November 2012, but
they do have to face the public then!!
It Could Have Been Worse is Small Comfort, but
Comfort Nonetheless
Even though nothing like the draconian cuts planned in
the regular session of the legislature by Senator Smith and his
Legislative Finance Committee allies (including a 2.46 % salary cut for all public
employees), the budget on its way to the Governor still cuts most state
agencies by 2 percent c next year (really 2.5%, see explanation below).
Public education will have its total
funding reduced by about 1.2 (really 1.8%, see explanation below)
percent compared with this year's spending level. The state
equalization guarantee, the portion of school funding that flows
directly to school districts for most operational costs would be cut by
one per cent after the effect of the sanding amendment described
below.
A so-called "sanding" amendment cuts another .544% from
every line item in the budget!
The complete plan worked out by legislative leadership
would result in slightly more than $233 million per year in new taxes
as well as less money for government services and public schools.
Our final update next Monday will further analyze the
cuts and have a recommended message for the Governor as he decides whether
to sign or veto all the bills described in this update.
Stay tuned!
Education Partners' Poll on school funding and revenues
Follow this
link for legislation that passed in the regular session
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