NM governor cautions against tax increases
Lawmakers have two months to find enough money to maintain critical government services and close the state's budget shortfall
SANTA FE — New Mexico Gov. Susana Martinez today urged lawmakers to avoid tax increases, calling it the easy way out of a stubborn budget deficit, as she proposed a smaller and more efficient state government at the start of the legislative session.
New Mexico lawmakers have the next two months to find enough money to maintain critical government services and close the state's budget shortfall.
In her seventh State of the State address, Martinez described her plan for balancing the budget without tax increases by eliminating tax loopholes and sweeping funds from idle accounts.
"Let's not take the easy way out," Martinez told lawmakers and other officials gathered in the state Capitol. "There is a way forward without raising taxes on hard-working New Mexicans. ... We must continue diversifying our economy and restraining the size of government."
Martinez's budget remedies combine agency spending cuts and one-time withdrawals from school district reserves and other state accounts. She also proposed reducing government contributions to pensions for teachers and state workers, who would then pay in more — a move that would cut into the take-home pay of 80,000 public employees.
She urged lawmakers to consolidate state agencies and continue funding economic development incentives for job training and infrastructure. Doing so, she said, would help curb the state's reliance on revenue from the oil and gas sector.
"Make no mistake about it, we are diversifying our economy and laying the foundation for private-sector growth," Martinez said.
The second-term governor said the state's economic revival also will depend on bolstering public safety and educational reforms. She highlighted an upward surge in the state's high school graduation rates but acknowledged more needs to be done to ensure students are better prepared at a younger age.
She urged Democrats to join her continued efforts to end so-called social promotion and retain third-grade students when they cannot read or meet minimum literacy.
Senate Democrats said they would halt the governor's effort to end social promotion. They also criticized proposals to draw down school reserves and make pension contribution changes.
"The Legislature will find a way to balance the budget without sacrificing teachers," Sen. Joseph Cervantes, D-Las Cruces, said.
Martinez reiterated her support for tougher criminal penalties, such as mandatory life sentences in some instances of child abuse resulting in death. She said convicted killers of police, children and corrections officers deserve the death penalty, which New Mexico repealed and replaced in 2009 with mandatory lifetime sentencing.
New Mexico is currently on track to spend $220 million more than its anticipated revenue during the fiscal year that ends June 30.
Credit agencies have warned of a second downgrade to the state's credit rating if officials cannot shore up depleted reserves.
With the start of the session, Democrats resumed full control of the Legislature with majorities in both chambers.
Incoming House Speaker Brian Egolf of Santa Fe urged his colleagues to work together toward greater economic security for families and businesses. Amid the sluggish state economy with the nation's second-highest unemployment rate, Democrats are promising a slate of economic development and job-creation proposals.
State economists and independent analysts have said New Mexico is gradually running out of one-time financial fixes as it scours idle accounts for cash and claws back money from delayed construction projects.
"We have a budget that exceeds our revenues in the current year and next year," said Richard Anklam, president of the nonpartisan New Mexico Tax Research Institute. "And there are only two ways to fix it — you can decrease expenditures or raise revenues, or both. And that's where the fight is."
Despite the governor's no-new-taxes vow, lawmakers are considering new taxes on consumer goods. A possible tax on some health care services would help the state preserve federal matching funds for Medicaid payments.