SANTA FE, N.M. (AP) — Republican Gov. Susana Martinez proposed a nearly $5.9 billion state budget on Thursday that's close to the overall spending recommendations of a legislative panel, but the administration's plan for tax cuts and merit pay for educators could run into trouble in the Democratic-controlled Legislature.
Martinez outlined a budget blueprint that provides for a 4.1 percent, or $232 million, increase in spending in the fiscal year that starts next July. That closely resembles the $233 million increase for public schools, higher education and general government programs proposed a day earlier by the Legislative Finance Committee.
However, there are plenty of areas of potential disagreements with Democrats in the details of the governor's budget.
Martinez proposed $11 million for a merit pay system for teachers and $47 million for tax cuts as economic development incentives. Unlike the legislative panel, Martinez did not recommend an across-the-board 1 percent pay raise for state workers and educators — a $32 million provision under the legislative committee budget.
"At a time when New Mexico families are still struggling across the board, pay increases for government employees is not something that I can include in my budget," Martinez said at a news conference at an elementary school in Santa Fe.
The Legislature convenes next week for a 60-day session.
Martinez proposes to implement a reduction in the corporate income tax rate over three years, lowering it from 7.6 percent to 4.9 percent, and revamp how New Mexico determines the taxes owed by corporations doing business in multiple states. Those would cost about $255 million when fully implemented. The governor also wants to establish a tax credit for small businesses that create jobs.
Senate Majority Whip Tim Keller, the No. 3 Democratic leader in the upcoming session, said lawmakers need to consider closing tax loopholes to offset the cost of corporate tax changes.
"Right now those cuts are just too big," said Keller.