NM governor: Tax increase inevitable next year

Gov. Bill Richardson predicted that New Mexicans will face higher taxes next year to deal with the state's continuing budget problems.

"It's inevitable," Richardson said Monday at a news conference. "It's very painful."

The Democratic governor has opposed tax increases, such as repealing more than $300 million in personal income tax cuts enacted in 2003. The governor supported the reductions in the top income tax rates as an economic development tool to help attract industries with high-paying jobs.

Richardson did not speculate on what tax measures are likely to win approval in the Legislature, which convenes in January for a 30-day session. The governor announced two weeks ago that he plans to appoint a group of state officials, business leaders and others to study tax proposals that could be considered during the 2010 legislative session.

Taxes were not part of the agenda of last month's special legislative session, which Richardson called to deal with a $650 million revenue shortfall. Despite that, several lawmakers introduced tax bills, including repealing the 2003 income tax cuts and raising taxes on cigarettes, liquor, and the sale of cars and trucks.

During the special session, lawmakers approved a $525 million package of spending cuts and one-time budget fixes - such as raiding programs' cash balances - to ease this year's budget problems. No tax increases were adopted, however.

Richardson has until Nov. 12 to sign or veto the measures. The governor said he's considering using his line-item veto power to reject parts of the budget-cutting bill, which requires 7.6 percent cuts for agencies under the governor's control. The administration also must eliminate 102 political appointee jobs.

Agencies have warned that the 7.6 percent cuts could curtail governmental services to the needy and force the early release of prison inmates.

The governor said he could order his agencies to reduce their spending even if he vetoes the 7.6 percent spending cuts in the legislation.

"This is a serious budget deficit and we've got to significantly cut state government," Richardson said. "But I am going to do it responsibly."