SANTA FE, N.M.—New Mexico lawmakers wrapped up their work Saturday by rushing through a last-minute package of business tax cuts supported by Republican Gov. Susana Martinez to encourage economic development.

By approving the tax measure, the Democratic-controlled Legislature averted a possible special session later this year. The governor said she would sign the tax cuts as well as a $5.9 billion state budget she previously had threatened to veto.

The tax measure cleared the Legislature in the final minute of the session, with the House agreeing to it as time ran out.

"It was a dramatic close to the session. It came down to literally the last few seconds, but this was an important victory for all of New Mexico," Martinez said after the session.

The governor made business tax cuts a centerpiece of her legislative agenda and has complained that New Mexico isn't competitive with neighboring states because of its corporate income tax.

The measure will reduce the state's corporate income tax rate from 7.6 percent to 5.9 percent over five years and provide a tax break for manufacturers that sell most of their goods or services outside of New Mexico. The legislation will narrow two recently enacted business incentives to limit their cost to the state. It allows cities and counties to raise taxes to offset revenue the state will no longer provide them over 15 years.

The measure also includes expanded tax incentives for television and film production, a proposal Martinez had vetoed earlier because it wasn't part of a broader tax package.


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Failing upon adjournment was a proposal to expand background checks of people buying firearms from private sellers at gun shows. The Senate debated the measure but it died as opponents offered repeated amendments to run out the clock on the session.

Democratic and GOP lawmakers described it as a fruitful session.

"We did a lot on education," said House Speaker W. Ken Martinez, a Grant Democrats. He pointed to the expansion of a program for longer academic years for low-performing schools.

Senate Republican Leader Stuart Ingle of Portales said, "I think we've done a good job this year."

Several high-profile parts of the governor's legislative agenda were dead well before adjournment.

For the third straight year, Democrats blocked the governor's efforts to halt driver's licenses for illegal immigrants. New Mexico and Washington state allow illegal immigrants to obtain the same driver's license as a U.S. citizen.

The Legislature once again turned down the governor's proposal to have schools hold back third-graders who are struggling to read. The governor wants to stop the practice of "social promotion" in which students are advanced to the next grade regardless of whether they're prepared. Opponents of the governor's proposal say the focus should be on providing more intensive help to students.

The Senate also left Public Education Secretary Hanna Skandera languishing without a confirmation vote. She's able to continue in her job but is the only cabinet-level agency leader in the Martinez administration that hasn't been endorsed by senators. A Senate panel held 10 hours of hearings on her confirmation without voting.

The governor said the Skandera hearings showed "just how low politics can go in Santa Fe."

Lawmakers sent the governor key proposals to shore up the long-term finances of pension plans for educators, public employees and judges. A Martinez-backed measure was approved to establish a state-operated health insurance exchange to help the uninsured buy health coverage. Also passed by the Legislature was a bill to help the state develop a commercial space industry by limiting the liability of space travel companies in case of accidents.

Martinez said she would study the pension bill closely, but said she will veto a Democratic proposal to raise the state's minimum wage to $8.50 -- the fourth highest in the country.

The governor said she had agreed to compromise with Democrats to raise the hourly rate from $7.50 to match the $7.80 paid in Arizona, the highest in the region. But lawmakers insisted on passing a measure that is "unsustainable," she said.