Senate approves $10.22 billion budget, tax package but sends changes back to House

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Feb. 12—Debate on two of the most consequential bills the New Mexico Legislature is considering this year — the state's proposed $10.22 billion budget and an omnibus tax package — mirrored each other Monday in the Senate.

There were parts lawmakers liked and others they didn't.

In the end, both House measures cleared the Senate but are headed back to the House for a concurrence vote due to changes made in the Senate.

"The reality is there are things in here that all of us have a little heartburn about, and there's things that we like," Senate Majority Leader Peter Wirth, D-Santa Fe, said after lawmakers approved the proposed budget 31-10 and began to deliberate on the tax bill, which later passed 26-13.

House Bill 2, the proposed budget for fiscal year 2025, increases spending over the current fiscal year by 6.8%, or $653 million, and includes scores of appropriations that will affect New Mexicans in different ways, from increases in Supplemental Nutrition Assistance Program benefits for seniors and people with disabilities to pay raises that would make New Mexico State Police the highest-paid police force in New Mexico.

Smoother roads are also in store for drivers, thanks to a $747.8 million transportation package.

In addition to funding an array of projects, programs and initiatives, the spending plan seeks to turn today's record revenues into "future money."

It invests a significant amount of the estimated $3.48 billion in so-called new money, or expected revenue increases in the next fiscal year, into funds that will spin off a percentage of their earnings down the road.

The Conservation Legacy Permanent Fund, for example, would receive a $300 million appropriation under the proposed budget.

"That'll spin off 5% a year, which will mean somewhere in the range of $20, $21 million a year for all the specific programs that are part of that fund," Wirth said.

Wirth called it a "terrific way" to fund forest and watershed restoration, outdoor recreation and soil and water conservation districts, among other initiatives, with a "steady recurring stream of money" without building a new recurring appropriation into the budget.

"If we didn't do that, we would be at tremendous risk down the road of creating a whole string of recurring appropriations that we would then be pulling back, so that is just a huge step forward," he said.

One Democrat — Sen. Bill Tallman, D-Albuquerque — joined nine Republicans in voting against the proposed budget.

Tallman offered his colleagues a "top 10" list of reasons he planned to vote against the budget, including no appropriation for the construction of a multipurpose arena in downtown Albuquerque and only $5 million set aside for food banks when he said they had requested more.

Tallman also criticized the short amount of time he had to review the budget.

"I've had the budget for less than 24 hours," he said. "I don't really feel that I can make an intelligent decision on whether it's adequate or not. We spent more time on this floor debating guns than we do the budget. I know more about guns than I do the budget."

Other lawmakers pointed out the budget-building process begins immediately after the session and includes public meetings Tallman and others are welcome to attend.

At the conclusion of the 1 1/2 -hour debate on the proposed budget, Sen. George Muñoz, a Gallup Democrat who is chairman of the Senate Finance Committee, said New Mexicans should be proud.

"Hold your head up high," he said.

"You may not like everything that's happening here, but New Mexico, you are not a poor state," Muñoz added. "Quit telling other people you're a poor state."

Muñoz said the Senate Finance Committee made about $800 million in changes to the spending plan approved by the House.

In an interview after the vote, he said he didn't anticipate the House rejecting the changes.

"The House thought they sent over the most perfect budget," Muñoz said. "Well, it was short for veterans. It was short for child literacy. It was short for school meals. The list just goes on and on."

The list of items in the tax package, House Bill 252, which will cost an estimated $217 million in fiscal year 2025, is also extensive.

The large components are personal income tax bracket adjustments.

"The personal income tax structure proposed ... will decrease taxes for all taxpayers, with the rate decreases targeted at the lowest-income earners," said Sen. Benny Shendo, D-Jemez Pueblo, chairman of the Senate Tax, Business and Transportation Committee.

The tax package includes a number of environmentally friendly incentives, which were lauded by the Rio Grande chapter of the Sierra Club.

"The governor, legislators and climate advocates joined forces to build an even more beneficial climate package this year," Director Camilla Feibelman said.

The tax package "contains incentives for new and used electric vehicles, rooftop solar, home heat pumps and geothermal electricity as well as industrial renewables and storage," she said.

Sen. Craig Brandt, R-Rio Rancho, was among the nine Republicans who voted against the tax package.

"We've got this tax package, which I'll agree with the majority leader, you know, there's some things in it I actually like. Heck, there's a piece in there that's mine," he said, referring to an income tax deduction for school supplies purchased by a public school teacher.

But he said there were a couple of items that made it "really hard" to vote in support of the entire package.

"There's things in here I like. There's things in here I don't like," he said. "It's a tough bill for me."

Brandt lamented the tax package's lack of an incentive encouraging more police officers to move to the state or a refund or tax credit for people who buy safes or locks for their guns.

"There's things that we could have dealt with in here," he said. "But I'll tell you what we did do in here, and this is great if you really love 'em. We have set up a huge amount of money in here for rich people that want to buy [electric vehicles]. We're gonna to subsidize the heck out of that EV for you because let's just be honest. The only people who buy EVs are upper middle-class and higher."

Follow Daniel J. Chacón on Twitter @danieljchacon.