A literal reading of the Proclamation clearly states that “legislation to balance the state’s fiscal year 2010 budget, limited to such measures as set below, and excluding any other measures that would alter existing taxation and/or revenue enhancement structures. . .” The debate centered around separation of powers and the constitutionality of the Governor’s wording, limiting what the legislature could do to resolve the current budget shortfall and whether or not he had the constitutional authority to do so.

This is the question that was debated on each piece of legislation to increase taxes that was referred to the Committees Committee for a determination of whether or not they were germane. A complete summary of the tax proposals is presented in the October 18 blog with a brief summary of the12 pieces legislation debated below with the committee vote on whether or not the legislation was ruled germane on not.

SB1: Insurance Service GRT Increase introduced by Sen. D. Feldman proposes to increase the GRT on insurance services for administration-only contracts. The majority ruled that this bill was not germane by a 7-4 vote.

SB2: Eliminating Soft Drink Gross Receipt Deduction introduced by Sen. G. Ortiz y Pino proposes that soft drinks not be included in the definition of food. In 2004, the Legislature made food exempt from GRT and this change would impose the GRT on the sale of soft drinks. The majority ruled that this bill was not germane by a 7-4 vote.

SB3: Federal Deduction as State Taxable Income introduced by Sen. G. Ortiz y Pino amends the Income Tax Act by amending the definition of “net income” to make certain federal deductions taken by taxpayers subject to New Mexico taxable income. Applies to amounts paid as state or local tax that are deducted from federal taxable income. The majority ruled that this bill was not germane by a 7-4 vote.

SB4: Medicaid and Developmental Disabilities Waiver Funding-Cut Prohibition introduced by Sen. T. Keller prohibits funding cuts during the special session for persons who are currently enrolled in the Medicaid Program or enrolled on the Developmental Disabilities Waiver. The majority ruled that this bill is germane by a 6-5 vote.

SB5: Annual Agency and Local Government Tax Expenditure Budget introduced by Sen. T. Keller would appropriate $100,000 to Taxation and Revenue Department in FY 2010 to develop, compile and present a tax expenditure budget. The bill would require the department secretary to develop a tax expenditure budget for the upcoming fiscal year by October 15 of each year. The budget would include data from the three years proceeding the current fiscal year, the current fiscal year and the upcoming fiscal year. The report is to be presented to the Governor and the Legislative Finance Committee and is to report on tax expenditures with revenue impacts of more than $1 million in the aggregate for specific tax expenditure. The majority ruled that this bill is germane by a 6-5 vote.

SB6: Restoration of Special Session Budget Reductions also introduced by Sen. T. Keller proposes to provide certain conditions under which reductions to the Fiscal Year 2010 Budget will be restored to state agencies. For restoration to occur, the state’s Consensus Revenue Estimating Group must report during FY2010 that General Fund revenue has increased by at least five percent over the October revenue estimate. The majority ruled that this bill is not germane by a 6-5 vote.

SB7: Income Surtax Distribution to Public School and Medicaid introduced by Sen. E. Griego imposes a state income surtax for taxable years 2010 through 2012 on taxable income and earmarks 50% of the receipts for public schools and Medicaid. (Detailed rate increase under October 18). The majority ruled that this bill is not germane by a 7-4 vote.

SB8: Corporate Income Tax to Public School Fund introduced by Sen. P. Wirth would require unitary corporations in the state of New Mexico to file income tax returns on a combined basis. The majority ruled that the bill is not germane by a 7-4 vote.

SB9: Higher Income Tax Rates introduced by Sen. L. Lopez would restore the PIT to the pre-2004 rates. (Detailed rate increase under October 18). Senator Lopez was not available to present her bill so the bill was not debated.

SB10: Raises Liquor Excise Tax introduced by Sen. B. Sanchez would raise the liquor excise tax on spirits from $1.60 to $2.00 per liter, on beer from 41 to 95 cents per gallon and on wine from 45 to 65 cents per liter. The tax on beer produced by a microbrewer rises from 8 to 62 cents per gallon. Wine produced by a small winegrower jumps from 10 to 30 cents per liter on the first 80,000 liters sold and from 20 to 40 cents per liter for production over 80,000 liters. The majority ruled that the bill was not germane by a 7-4 vote.

SB11: Higher Tax Rates for High-Income Taxpayers introduced by Sen. B. Sanchez imposes a 1% surtax increase on taxable income of: $80,000 for married individuals filing separately; $160,000 for heads of household, surviving spouses, and married individuals filing jointly; $100,000 for single individuals, estates and trusts. The majority ruled that the bill was not germane by a 7-4 vote.

SB12: Cigarette Tax Hike introduced by Sen. B. Sanchez proposes an increase to the cigarette tax by 50 cents per pack and amends the distribution statute to direct all of the increase to the General Fund. The majority ruled that the bill was not Germane by a 7-4 vote.

SB13: Public Education Staffing and Instruction Waivers introduced by Sen. V. Asbill would require the Public Education Department to temporarily waive requirements of the Public School Code regarding class and teaching loads, length of school day, staffing patterns, subject areas, instructional materials purchases and their adoption cycle, personnel evaluation, school principal duties and driver education. Applies to school years 2009-2010 through 2011-2012 and cites fiscal solvency issues as the basis for the waiver. The majority ruled that the bill was germane by a 7-4 vote.