SANTA FE, N.M. — A clash about whether to increase taxes in New Mexico escalated Thursday as the Democratic-led state Senate pushed forward with a proposal to raise more money from taxes on gasoline, diesel and vehicle sales.
Joined by three Republicans, Democratic senators approved a bill that would provide $183 million to shore up state general fund reserves and boost funding for road maintenance.
The plan would raise the tax on retail sales of gasoline for the first time in more than 25 years, adding 10 cents to each gallon — or 27 cents overall. The tax on diesel would increase by 5 cents, and vehicle sales taxes would increase from 3 percent to 4 percent. About $20 million a year would be redirected temporarily from petroleum truck loading fees that currently help clean up underground gasoline storage tank sites.
Republican Gov. Susana Martinez said through a spokesman Thursday that she opposes the gasoline tax hike and would veto it.
Senate Finance Committee Chairman John Arthur Smith sponsored the plan as a partial solution to the state's budget crisis. He said as much as $300 million in new revenues are needed next year to protect the state's credit rating and avoid cuts to state spending on public schools and other government services.
Without new revenue streams, Smith said, "We're going to be forced to cut education, higher education, health care, corrections, law enforcement — by at least 5 percent."
Martinez has voiced opposition to outright tax increases as New Mexico wrestles with a budget shortfall for the coming fiscal year, instead calling on state government to "tighten its belt." She has indicated a willingness to rescind tax credits and deductions.
"The administration will continue to negotiate with legislative leaders on comprehensive tax reform that closes loopholes, broadens the base, and reduces rates," said Michael Lonergan, a spokesman for the governor, in an email.
The gas tax bill now moves to the House of Representatives, which has approved its own $250 million package of revenue increases that include one identical component — the tax increase on vehicle sales. Republicans in the House minority have come forward with their own budget remedies.
Republican Senate minority leader Stuart Ingle voted against the Senate gas tax bill but said some elements might work in more comprehensive legislation addressing the state's budget shortfall.
Moody's downgraded New Mexico's bond rating last year as the state struggled to close its budget deficit after burning through the state's general fund reserves.
The lingering deficit for the current fiscal year was plugged in January by the Legislature and Martinez by sweeping money from school district reserves and other government accounts.
Spending across state agencies was slashed by 2.4 percent during a special legislative session in October, with much larger cuts at most agencies.