vegetables at supermarketAttorneys for Gov. Bill Richardson are researching whether it is legal for him to veto a controversial food tax provision in legislation state lawmakers sent him last week.

“I don’t want to (balance the budget) it on the backs of ordinary citizens. I don’t believe that food tax was necessary,” Richardson said earlier this week.

But one state lawmaker is questioning the depth of Richardson’s stated concerns over how the provision will affect the state’s population.

“The deal was, we were gonna have a food tax.”

Sen. Eric Griego, D-Albuquerque, said this week that the governor always knew the food tax was part of an agreed-upon budget package and described the governor’s protestations as a public “dance.”

In an episode of KNME’s New Mexico in Focus that will air Friday night (clip below) Griego said Richardson “specifically declined to put any balanced taxes on there…and he basically said we will have a food tax,” referring to Richardson’s agenda for the recently completed special session.

“In essence, the deal was, we were gonna have a food tax,” Griego told The Independent’s Gwyneth Doland, a correspondent for KNME.

When asked if Griego was saying the governor knew about, and pushed for the food tax, Griego said, “Absolutely. It was in his proclamation. Read his proclamation. So the governor and the leadership in both houses had a deal coming into the session. That’s the truth.”

The governor set the agenda for the March 1-4 special legislative session. And his proclamation, which lays out the agenda, includes language that called for “the repeal of the gross receipts deduction for receipts from certain sales” – largely understood to be food.

The governor’s office did not respond to an e-mail sent Thursday seeking a response.

Sen. Smith says governor never liked food tax

Another lawmaker who helped negotiate the state budget package, including the legislation that contains the food tax provision, questioned Griego’s version of events, however.

“I don’t know where Eric is getting his information,” said Sen. John Arthur Smith, D-Deming, who has been a frequent Richardson critic.

“In fairness to the governor, he never said ‘I’ll sign off,’” to the food tax provision, But, Smith added, “He never said he would veto it.”

The governor made clear that he preferred raising the state gross receipts tax to taxing food, Smith said Friday.

“He never gave a wink of approval,” Smith said of the governor, but “He didn’t argue against it, because we had a number we had to hit with revenues. We knew we had declining revenues.”

Griego and several lawmakers in the House and Senate pushed for a surtax on the state’s wealthiest residents to help close next year’s projected shortfall of several hundred million dollars, but they lost that battle.

Guv may not legally be able to veto

On Wednesday, the governor stopped short of saying that he was leaning toward vetoing the food tax provision if his attorneys find that it is legal of him to take such action. Richardson can only use his line-item veto authority on bills that include an appropriation, or state expenditure.

But is a tax rebate an appropriation? The bill that contains the food tax provision includes $5 million set aside to expand the Low-Income Comprehensive Tax Rebate program.

“We are determining whether that in effect is an appropriation. And I think that (the determination) is coming pretty soon,” Richardson said.

“If there’s no option I have to sign it,” Richardson said.

Opponents of the food tax provision – which automatically re-institutes a tax on food in municipalities across New Mexico – have vigorously lobbied him to get rid of the tax, saying it harms low-income and middle-class New Mexicans.

Although the governor wouldn’t telegraph his decision, he sounded sympathetic to that argument Wednesday, when he spoke with several members of the media about the tax provision.

“It’s one of my achievements when I first came in,” Richardson said of the state’s repeal of a food tax. “We got rid of that food tax and now it’s back in there.”

Food tax would shift burden to local governments

The food tax effectively reapplies local and county gross receipts taxes on food, which average about 2 percent across the state, while clawing back annual state payments to local governments. Those payments are made to compensate for the annual loss of revenue caused by the repeal of the food tax in 2005.

Albuquerque could lose approximately $1.6 million in the budget year that starts July 1 and $3.2 million in the following year. Santa Fe, on the other hand, might gain some revenue next year because of the food tax provision, but lose up to $500,000 in the following year.

Those and other municipalities may choose to raise taxes or cut spending to balance their budgets.

Veto would leave $65 million hole

A veto of the food tax provision would cut off more than $65 million the state was counting on for next year’s budget.

Richardson acknowledged Wednesday that public input has been overwhelmingly in favor of a veto, but said he had not yet decided what to do. Weighing on him was the issue of how to fill the budget hole that a veto would cause.

“…Where do we get the money? The $66 million we need to deal with the budget?” Richardson said Wednesday.

The state budget lawmakers approved last week gives Richardson special authority to trim expenses next year if New Mexico’s finances reach a crisis.

“I believe that what the Legislature has done is given me the authority in case of emergency to make cuts, maybe because they don’t want to make them,” the governor said, then chuckled.