Legislative leaders strike a budget deal

Legislative leaders have struck a tentative budget deal, and just in time.

Gov. Bill Richardson got a glimpse of the proposed agreement around 1 p.m. Friday and pronounced it good, one legislative leader said.

“The governor said you’ve done a lot of work. I will put out my proclamation on Monday,” Rep. Luciano “Lucky” Varela, D-Santa Fe, told the Independent on Friday afternoon.

The New Mexico Legislature is scheduled to go into a special session Monday to craft a state budget for next year. The challenge confronting lawmakers is addressing a projected shortfall between revenues and expenditures of several hundred million dollars.

The agreement is meant to accomplish that through a mixture of tax increases and spending cuts.

“Some of what we’ve done is some heavy lifting in trying to get everyone on board,” said Sen. John Arthur Smith, D-Deming, another participant in this week’s high-level budget talks.

Neither Varela nor Smith would discuss the details of the proposed agreement.

But the recently struck deal apparently involves raising $233 million in revenue through several tax increases, officials said.

Those revenues would come from increasing the state’s gross receipts, cigarette and compensating taxes. Certain foods also would be taxed for the first time in years, although it’s unclear what food items would fall under the state’s gross receipts tax. New Mexico stopped taxing food several years ago.

The Legislature considered many of the tax proposals said to be a part of the proposed budget agreement during the just-ended regular legislative session.

Among the tax proposals considered was a half-penny increase to the state’s gross receipts tax and a $1 hike to the state’s cigarette tax. A proposal to tax certain foods also was contemplated. All three ideas died during the regular legislative session as time ran out on legislative leaders’ efforts to cement a budget deal.

It was unclear Friday if the details for the tax proposals in the proposed budget agreement are the same as they were during the regular legislative session.

Proposals that didn’t make the cut in the budget deal were a surtax on income earned by the wealthiest New Mexicans and a levy on out-of-state corporations through a mechanism commonly referred to as combined reporting.

The proposed budget agreement also relies on spending decreases. State agencies are expected to shave spending, but how much remains undisclosed. Public education, meanwhile, would be reduced by about 1 percent, officials said.

During the regular session lawmakers considered making state agencies shave spending by roughly 1.5 percent.

The proposed agreement represents the possible culmination of weeks of wrangling by legislative leaders in the House and Senate as they tried unsuccessfully to craft a state budget that addressed next year’s projected shortfall.

“We gave and we took, concessions were made,” said Varela, who is the chairman of the Legislature’s budget arm, the Legislative Finance Committee. “That’s why we were able to fashion this package.

Legislative leaders will present details of the proposed agreement to lawmakers over the weekend and on Monday in hopes that a majority of the Legislature’s 112 lawmakers sign off on the agreement.

If that happens, and that’s a big if, there is hope that the Legislature can hone the details of the state budget and pass it through both chambers in about three days, Varela said.