LFC plan would cut teachers' pay

SANTA FE (KRQE) - The New Mexico Legislative Finance Committee on Monday released its budget recommendations for the 2011 fiscal year, which includes a 2 percent pay cut to all state employees and public educators.

The outlook for the state's budget is grim. Over the past two years, the state lost 20 percent of its recurring revenue — $1.2 billion — and about 40,000 New Mexicans lost their jobs — 6 percent of the private workforce.

The LFC, a bipartisan group of senators and House members, issued its recommendations on Monday afternoon.

In addition to the 2 percent salary cut to state workers and educators, the staff recommends eliminating 1,000 state positions, most of which are vacant.

Still, the recommendations leave the budget $200 million short, which will require Gov. Bill Richardson and lawmakers to figure out how to make it up, most likely through further cuts or tax increases.

"These affect the everyday citizens," said Rep. Lucky Varela, D-Santa Fe. "We need to be careful. These impact ordinary people."

Gov. Bill Richardson said he wants to work with lawmakers on increasing taxes, but wants a trigger to end the tax hikes when the economy recovers.

Taxation and Revenue Secretary Rick Homans suggested raising gross-receipts taxes by a quarter cent, which would raise $120 million a year. Businesses are charged gross-receipts taxes, and usually pass it on like a sales tax.

Homans said reinstating gross-receipts taxes on grocery items is controversial, but raising taxes on just soda and candy is an option. He also said there is support for raising "sin taxes" on alcohol and cigarettes.

But, Rep. Don Tripp, R-Socorro, said he "would be very hard-pressed to vote for tax increases."

While the LFC's recommendation is just a recommendation, it carries a great deal of weight for the Legislature, who will have to hammer out a budget during its 30-day session beginning Jan. 19.