Special session in store

The Associated Press

SANTA FE — The New Mexico Legislature adjourned Thursday without a plan on how to finance public schools and state government in the coming year, marking the first time in 26 years that lawmakers finished a regular session without reaching a budget deal.

Shortly after lawmakers wrapped up their 30-day session, Gov. Bill Richardson announced a special session to deal with the state budget would open Wednesday. A special session will cost about $50,000 a day.

“New Mexico taxpayers want a solution. They don’t want to wait,” said Richardson. “We don’t need another month or two of indecision. I think it’s important that we move as rapidly as we can.”

House Speaker Ben Lujan, D-Santa Fe, said the Senate and House were unable to bridge their differences over increasing taxes to balance the budget. Legislative leaders tried to negotiate a deal to plug a hole in the budget with revenues from gross receipts, income and cigarette taxes.

House Republican Whip Keith Gardner of Roswell summed up the feelings of his GOP colleagues: “We’re frustrated.”

“We were sitting here for a purpose, which was the budget, and everything else should have taken a back seat,” he said.

Still, Lujan and House Democrats said they were able to make some progress in the waning hours and believe they will have a good place to start when the special session resumes next week.

“We feel that we have a roadmap in place. We were at the one yard line and we couldn’t throw the final pass to make that touchdown,” said Lujan. “We feel that when we come back, we’ll be able to have a play in place to make that final touchdown.”

Lawmakers said they’re hopeful that a few days rest will allow them to work out their differences.

“The efforts were here,” said Senate Minority Leader Stuart Ingle of Portales. “The Senate operated extremely well. Hopefully if we come back soon in a special session, we can agree to things. Our revenues are fluctuating, we all know this is a real tough time for New Mexico.”

“For New Mexico’s sake, we’ve got to make certain we can pay our bills and keep people employed as best we can,” said Sen. John Arthur Smith, a Deming Democrat and chairman of the committee that handles the budget.

Rep. Dennis Roch of Tucumcari said tax increases aren’t the solution to balancing the budget.

“We need to work on a way of cutting spending in the state,” said Roch. “We have to cut spending without cutting funding to vital programs such as education.”

The last time the Legislature finished a regular session without approving a budget was 1984, according to the Legislative Council Service.

Before adjourning Thursday, the Legislature approved proposals to

• Provide $150 million to replenish the state’s cash reserves by canceling thousands of capital improvement projects. Ample reserves provide a financial cushion if revenues drop unexpectedly.

• Stop double-dipping by future government retirees. The bill will suspend their pensions if they go back to work for the state or a local government starting in July.

• Overhaul the State Investment Council, lessening the influence of the governor over its membership. The council oversees management of New Mexico’s permanent funds.

• Shore up the state’s unemployment program by raising taxes on businesses.

• Improve Hispanic student performance and increase their high school graduation rates. The measure was one of Richardson’s top priorities.

• Allow concealed handguns in restaurants serving wine and beer.

The state faces a budget squeeze because revenues dropped as the economy weakened and energy prices fell.

New Mexico expects to collect about $5.1 billion in revenues next year — $600 million below spending in the current fiscal year. Lawmakers had planned to use about $200 million in federal economic stimulus money to help cover the shortfall.

Fractures in the Democratic majorities in the Legislature complicated work on a budget package that had politically difficult tax increases and cuts in spending for public schools, colleges, courts and state agencies.

Not only were the House and Senate at odds over financial issues, but there were divisions within Democratic ranks of each chamber as liberal-leaning members wanted to avoid budget cuts and use tax increases to balance the budget. More conservative Democrats, particularly in the Senate, pushed to cut spending more deeply.

A House-passed budget relied on $300 million in tax increases: a surtax on upper-income New Mexicans and a half-cent increase in the gross receipts tax on goods and services.

The Senate’s budget proposal used more than $180 million in new revenues from reinstating the gross receipts tax on certain foods and a $1-a-pack increase in the cigarette tax.