IMG_3399It took less than half an hour Thursday for the Senate Finance Committee to pass its version of New Mexico’s nearly $5.3 billion dollar budget. The vote was unanimous and the key word Senators used over and over was: balance. That balance means the gross receipts tax will be expanded for New Mexicans, and state employees including teachers will have to pay more for their retirement.

“I don’t think there’s anyone around here who likes what we have to do” said Chairman John Arthur Smith, D-Deming.

When it came from the House, the budget called for $300 million dollars more than the state had. To make the numbers add up the House passed controversial tax measures. In two separate meetings that took place on Wednesday, the Senate finance committee (SFC) decided those tax measures didn’t have the support needed to pass. “We didn’t fee comfortable raising more than we cut,” said Sen. Carlos Cisneros, D-Questa.

The SFC budget calls for $154 million dollars worth of tax increases, and $152 million dollars in budget cuts. Here are the details of what the Senate did pass:

Taxes

There are two tax increases the SFC did pass on. The most notable is Senate Bill 10. What that measure does is add the gross receipts tax to food items that are not on the WIC (Women, Infants and Children) list and is expected to bring in $138 million dollars. The SFC also gave approval to House bill 120, the “Tax withhold changes” bill which passed the House and is expected to bring in $16 million. The surtax on wealthier New Mexicans and the temporary increase in the gross receipts tax that were passed in the House are not part of the HB 2 moving forward.

Budget Cuts

The SFC is recommending cutting public education funding by $53 million. Most of that is to restore budget cuts made in the previous budget and $15 million worth of cuts for insurance. The SFC says with the federal dollars headed to schools the cut in the education budget equals 2.6 percent. Higher education will see a cut of $6 million dollars as well.

The SFC is calling on government agencies to cut $10 million in spending.  They plan to you cash balances from the Attorney General’s consumer settlement fund and then some savings from smaller agencies. Agency appropriations will drop 4.3 percent.

The SFC also plans to save $82 million by asking employees to contribute more to their retirement. It also asks agencies and institutions to identify cuts they can make totaling  1 percent.

“This is not a perfect option,” said Sen. Cisneros “and it still has to go through the House.”

The new version of HB 2 should be on the Senate floor this weekend. If it passes as it is now the Senate and House would then have to negotiate on the final version. A process Sen. Smith said would be “fascinating and intriguing.”

Update: The Independent incorrectly reported that the Senate Finance Committee passed SB on Thursday. Instead the measure passed the committee on Friday. House bill 120 according to the Legislature website has been withdrawn from Senate Corporations Committee and as of Friday morning, is still on the agenda in Senate Finance. Both measures are still part of the over all SFC budget proposal.

SB 10 would tax non-staple foods. HB 120 measure would have required companies to collect withholding tax on people who earn income in New Mexico but that the state can’t locate, according to a legislative analysis. The companies in question — called ‘pass through entities’ — would make quarterly withholding tax payments on net income distributed to their non-resident owners, according to the legislative analysis.