Last night the House passed the budget (HB2) on a 39-27 vote.  There was one amendment introduced by Rep. L. Varela that passed as well.  This amendment directs the State Personnel Office to review all unfunded positions and agency vacancies and eliminate 1,900 positions by July 1, 2010.

The budget, as amended, will now move to the Senate for consideration.

The House also passed on a 41-26 vote, HB3: CIGARETTE TAX INCREASE & TRIBAL STAMP sponsored by Rep. G. Chasey. The bill increases the tax on a pack of cigarettes by $.75, and earmarks $.25 for Public Education.  The bill passed with a four-year sunset.  The bill now moves to the Senate.

*Please note that we mistakenly reported that SB7, the Senate version of this bill, passed Senate Finance yesterday.  This bill did not pass.  The Senate will consider HB3 instead.

The Senate Finance substitute for Senate Bills 10, 12, 13 passed the Senate Floor on a 41-26 vote and will now move to the House.  This bill does the following with the revenue impact (tax increase) noted:

$60M:  Increase the GRT by 1/8%

$12M: Amends the compensating tax, to impose the tax on purchases that are not subject to the gross receipts tax only because the seller does not have nexus with the state.

$68M: Repeals the food deduction but creates a 5.25 percent credit for food so that only local tax rates will apply to food at an average tax rate of slightly over 2 percent. The state would discontinue that portion of local government hold harmless distributions that are attributable to local option taxes. However, the state would continue to make a separate hold harmless distribution to municipalities equal to 1.225 percent of food sales for which a tax credit is claimed.

$66M:  Requires personal income taxpayers who itemize their deductions to reduce the amount of itemized deductions for New Mexico purposes by the amount of state and local taxes included in the itemized deductions for federal purposes.

($5M):  Expands LICTOR to help the low income people hurt by the increase of the food tax.