Not Everyone is Applauding the Veto

While Gov. Richardson's veto of the food tax won accolades from several -- including Lt. Gov. Diane Denish and New Mexico Voices of Children, not everyone was happy.

State Senate Majority Michael Sanchez, D-Belen, released the following statement:

“I am surprised that the governor has decided to take this action. Had he indicated three weeks ago that he would not support the legislation we would have taken a different approach. He was involved every step of the way. At no time during the special session did he raise any objections. He was very clear about what he wouldn’t support which is why the legislative and executive compromise we crafted didn’t include an income tax increase or a requirement that all corporations pay their fair share of taxes.

“The governor’s veto today puts the state’s financial future at even greater peril. His approach to balancing the budget relies heavily on general fund reserves and federal stimulus money. While this may work in the short-term and carry him through the end of his term, these are one-time revenue sources. Unless the economy drastically improves, the next governor will have to take action to raise recurring revenue for our state’s budget or make cuts that will impair services to New Mexicans.

“This action is unprecedented in the state’s history. The legislature will look at all appropriate action if it determines the governor has overstepped his veto authority.”

UPDATE: Richardson spokesman Gilbert Gallegos just sent the following response to Sanchez's statement:

“If Senator Sanchez wants to defend the tax on food, that’s his prerogative.”

Gov. Richardson's Food-Tax Veto Message

As you've probably heard, Gov. Bill Richardson has vetoed the food tax.

Here's a copy of his official message to the Legislature. (Sorry the copy is crooked.) The gov doesn't really get going on his reasons for the veto until the bottom of page 2.

As Richardson points out, this is his final action on any legislation -- at least barring any unforeseen special session. At his news conference this morning Richardson said he sees no need for a special session.

Veto Message Food Tax

Richardson Leaning Toward Vetoing Food Tax

That's what the Associated Press' Barry Massey is reporting. Barry's quoting Richardson spokesman Gilbert Gallegos.

There's no details on how the state would make up for the $68 million in revenue the food tax would provide.

There has been a legal question as to whether or not the governor could use his line-item veto power on the tax bill.

Meanwhile, the governor has scheduled a news conference tomorrow at 11:30 a.m. Tomorrow is the deadline for signing the budget and tax bills that came out of the special session of the Legislature.

Roundhouse Roundup: Food Tax Rumblings

A version of this was published in The Santa Fe New Mexican
March 11, 2010

I've heard rumblings that some delegates for Saturday's Democratic Party pre-primary convention at Pojoaque Pueblo's Buffalo Thunder Resort aren't happy about how some lieutenant governor candidates voted in the Legislature last week on reinstating a state tax on groceries.

While tax-hating/tax-baiting is generally the purview of Republicans, lots of Democrats — especially progressives — oppose taxing food because the burden falls harder on lower-income people, who spend a bigger percentage of their income on food.

But all three of the Democratic candidates for lieutenant governor who are legislators voted — directly or indirectly — to raise the food tax during last week's special session.

Sens. Jerry Ortiz y Pino and Linda Lopez, both Albuquerque Democrats, voted March 2 vote against an amendment to Senate Bill 10 that would have deleted the section on raising the food tax.

Over in the House, Rep. Joe Campos, D-Santa Rosa, voted March 3 in favor of tabling an amendment on SB 10 that would have deleted the section on raising the food tax. A "yes" vote on that tabling motion had the effect of killing the amendment, thus keeping the food-tax increase in the bill.

Not voting on the bill were lieutenant governor candidates Brian Colón and Lawrence Rael. They have a good excuse. They aren't in the Legislature.

On the Republican side, Rep. Janice Arnold Jones, an Albuquerque Republican running for governor, voted against tabling the anti-food-tax amendment, while in the Senate, fellow Albuquerque Republican Kent Cravens voted for the amendment that would have axed the food tax.

This shouldn't be a matter of contention at the GOP pre-primary convention in Albuquerque this Saturday. All five gubernatorial candidates have come out against the food tax. I'm pretty sure the GOP's other lieutenant governor candidates won't be criticizing Cravens for his vote.

Meanwhile, back at Buffalo Thunder: Lt. Gov. Diane Denish isn't worried about what her primary opponents are saying about her — because she doesn't have any.

On the matter of the food tax, she told reporters at a news conference last week that she was against reinstating the tax on food because, she said, it's regressive.

But, when asked by reporters, she wouldn't say whether she'd veto the food tax if she were governor.

In fairness, it's not an easy question. Gov. Bill Richardson, who also says he hates the food tax, is wrestling with the issue.

There's some legal question as to whether any governor has the right to line-item veto that portion of the tax bill. As Barry Massey of The Associated Press explained this week, "At issue is whether the tax bill appropriates money. Under the state Constitution, the governor can make line-item vetoes only in appropriations bills."

And even if SB 10 ultimately is deemed an appropriations bill, whether to veto still can't be an easy decision. If the food tax is vetoed from the bill, whoever is governor will have to find a way to make up for the estimated $68 million in revenue that the food tax would generate.

Even so, you've got to admire the spunk of a suggestion by GOP gubernatorial candidate Susana Martinez. In an e-mail to supporters and reporters Monday, she blasted Denish for not taking advantage of Richardson's trip to Window Rock, Ariz., for a few hours last week.

"Just last week, Denish was acting Governor," Martinez said in the letter. "As acting Governor, she even signed legislation.

"So, that raises this question: If Denish is so opposed to the food tax, and she was acting governor, why didn't she take the opportunity to show real leadership and VETO the food tax increase?"

Just think of the political uproar that move would have caused. Whether or not it would have been a wise move, it sure would have been a fun story to cover.


(Above: Acting Gov. Diane Denish signs a bill -- but doesn't veto food tax)

Hurry Up and Wait

Nothing much is happening now at the Roundhouse. At least not in public. The House Dems have been in caucus since the morning without coming up for air. Last night a veteran representative was joking with me about waterboarding dissident Dems -- specifically the ones who voted against the cigarette tax. Maybe they're doing that.

The Senate had a short floor session. The Senate Finance Committee met for awhile, without doing anything earth-shattering.

Earlier today, Think New Mexico delivered to the Governor's Office printouts of 511 e-mail letters from people protesting raising the tax on food. (That's a picture Jason Espinoza of Think New Mexico handing over the letters.

The governor's still signing bills from the regular session, (which seems like years ago ...)

Yesterday afternoon he signed SB 18, which restructures the State Investment Council.

“I have moved aggressively to restore confidence in our investment practices, and this new law will help ensure that our investments are not tainted in any way,” Gov. Richardson said in his news release.

The bill adds members to the State Investment Council -- including four appointed by the Legislature -- and will require appointed members to have 10 years of financial or investment experience. The bill also prohibits appointed members from having any contracts with state investment entities for two years prior to their appointment and for two years after their term ends.

However, the bill was amended during the legislative process. The fiscal impact report notes that contrary to the recommendations of Ennis Knupp, the Chicago consultants hired to examine the SIC, the governor and his appointees still will be the largest group on the council, accounting for five of the members.

Also, the governor will remain chairman of the council, also against the consultants' recommendations.

"Therefore if the amended legislation were enacted, the SIC would still be operating outside of national best practices and contradict numerous findings in the Ennis Knupp (report)," the fiscal impact report concludes. "This has the potential to create the risk that further turmoil and suspicion, from both a performance and reputational perspective, will continue to accompany these agencies at the potential cost of hundreds of millions of taxpayer and retiree dollars."

Oh well ....

What Local Governments Fear

My story in today's New Mexican is about a revenue bill that represents a move city and county officials have feared for many months.

Senate Bill 247, introduced earlier in the week by Senate President Pro Tem Tim Jennings, would phase out provisions of a law that kept city and county governments from taking major hits in their revenue when the state exempted food and medicine from gross-receipts taxes in 2004.

The buzz phrase is "hold harmless." Local governments are "held harmless" from losing revenue from their share of the taxes they got on food and medicine.

Last year the state paid local governments about $121 million in revenue they would have received had the taxes on food and medicine not been lifted. That $121 million would be a big chunk of he $600 million budget shortfall. (Jennings' bill would reduce the "hold harmless" distributions by 20 percent a year for five years.)

As Carter Bundy of AFSCME told me, "The only way they got (the food tax repeal) through was by agreeing to hold cities and counties harmless."

The city of Santa Fe receives about $10 million a year from the "hold harmless" distributions. Municipal League director Bill Fulginiti told me that some local governments would be even more hard hit. The town of Hatch, for instance gets nearly 30 percent of its budget from the "hold harmless" distributions.

No committee hearing has been scheduled yet for SB247. Its first stop would be the Senate Corporations Committee.

Food Fight!

I spent the afternoon Monday at the first meeting of the recently appointed Balanced Budget Task Force at Santa Fe Community College. When I saw how full the parking lot was at the college, I realized that a high percentage of the 42-member board had showed up.

All sorts of tax increases and restructures are on the table. But, as I point out in my story in Tuesday's paper, the one topic that raised a some debate Monday was the possibility of reinstating the gross receipts tax on groceries. My story on that is HERE.

The food tax was repealed in 2004. I re-read some of the coverage of that bill in the Legislature, which reminded me of the fact that the final vote happened around 5 a.m. the last day of the session.

I even stumbled upon an old Roundhouse Roundup column I'd written a couple of days before that final vote, documenting some of the tactics and late-night, back-room arm-twisting at a time when it looked like the food-tax bill was dead. You can read that column HERE.