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2010 Update Archive

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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