New Mexico governor draws line against tax-and-spend bills

SANTA FE, N.M. (AP) — New Mexico Gov. Susana Martinez stripped all funding for the state Legislature along with state universities and colleges from a proposed budget for the coming fiscal year, using her veto pen Friday to escalate a confrontation with lawmakers over how to shore up shaky state finances.

Martinez also vetoed a $350 million package of tax and fee increases designed by the Democratic-led legislature to stabilize funding for public schools, state courts and many state agencies recently hit with spending cuts to plug a lingering state deficit.

Democratic leaders of the Legislature accused Martinez of playing extreme political games while putting the state's credit rating at further risk after a downgrade by Moody's Investors Service last year.

The vetoed revenue bill from the Legislature would have raised $350 million by increasing taxes on gasoline and diesel, vehicle sales and internet purchases from major online retailers, along with increased permit fees for trucks and reduced tax exemptions on nonprofit hospitals.

The governor also vetoed a tax reform bill that would have created a new rainy-day fund to better insulate the state from downturns in tax revenue and economy recession, while phasing out a variety of tax incentives.

Sen. John Arthur Smith, D-Deming, the longstanding chairman of the Senate Finance Committee, said those reforms include contentious measures such as taxing public school supplies that have eroded political support.