Richardson proposes minimum-wage increase, bed-tax repeal

The Associated Press

SANTA FE — Gov. Bill Richardson on Tuesday called on lawmakers to increase the state’s minimum hourly wage to $7.50 over three years and repeal a tax on nursing home beds.

The proposals were highlights of his state of the state speech at the opening of the Legislature’s 30-day session.

Richardson outlined what he called an “agenda of relentless action,” touching on themes that will resurface later this year as he runs for re-election.

“At the end of four years, I want the people of New Mexico to know — without a doubt — that I delivered on my promise to move our state forward,” the Democratic governor told a packed House of Representatives chamber.

The governor had previously outlined most of his agenda, including a tax credit targeting the working poor, money for a needs-based college scholarship program and expansion of a newly implemented pilot program of pre-kindergarten.

He also had said he was on board for some minimum wage hike, but waited until Tuesday to announce the details: raise the current $5.15 to $6.50 an hour as of Jan. 1, 2007, $7 in 2008, and $7.50 in 2009.

Richardson called it “a meaningful increase that is also sensitive to New Mexico’s business concerns.”

Under the proposal, communities would be barred for five years from enacting any higher wage except for Santa Fe, which would remain untouched. The capital city’s ordinance requires $9.50 an hour currently for the largest businesses and $10.50 in 2008 if the city council gives the go-ahead.

Advocates of a higher minimum wage want an immediate $7.50, and they don’t want communities pre-empted from raising it even further.

“We see $7.50 as a floor, not a ceiling,” said Ruth Hoffman of New Mexicans for a Fair Wage.

House Speaker Ben Lujan, D-Santa Fe, said he will proceed with his plans to introduce that legislation; he said businesses can afford it.

That puts him at odds with the governor, whose initiatives he typically supports, but the two men downplayed any rift over the issue.

Business lobbyists were pleased with the phase-in and the pre-emption provisions and the fact that the mandated wage would not rise with inflation. But they still don’t like the bottom line.

“We were hopeful that the number would be lower than $7.50,” said John Carey, president of the Association of Commerce and Industry.

And GOP lawmakers said the phase-in doesn’t make the increase any more palatable.

“It can’t help but be inflationary — and some people are going to lose their jobs,” objected Senate Minority Leader Stuart Ingle, R-Portales, who said states shouldn’t tinker with the federally mandated $5.15 minimum.

House Minority Whip Terry Marquardt, R-Alamogordo, said a high-wage economy will be the result of better education and job training, not raising the wage earned by entry-level workers.
“We can’t help them climb the ladder of success by putting them on an elevator,” Marquardt said.

The proposed repeal of a nearly $9-a-day tax on nursing home beds, which was enacted in 2004 to generate more state and federal money for Medicaid, came as a surprise to lawmakers on both sides of the aisle. The governor — who has been criticized repeatedly by Republicans for the tax — said he decided at the last minute to put the item on the agenda.

He denied any political motivation, saying he did it “because I felt it was right.”

“It’s fulfilled its mission,” he said of the tax.

The administration said the repeal would cost the state about $20 million a year, and the money could come out of surplus revenues.

Senate Finance Vice Chairman John Arthur Smith, D-Deming, said he expects data to be released later in the session that will show the state collecting even more revenue than already projected, providing enough to cover the tax repeal and fund Medicaid.

“This year is the opportune time for us to look at that bed tax,” said Senate President Pro Tem Ben Altamirano, D-Silver City.

There is a huge pool of money available to spend: $529 million in new revenue that could be used to expand programs or cut taxes next year, and more than $1 billion in surplus revenues and bond financing that can go for local and state projects.

Richardson said the budget he proposed was “fiscally responsible.”

“There will be no feeding frenzy on tax dollars this year,” he said in his speech.

But Republicans, wary of a spending spree, urged a deliberative approach to budget decisions.

“We cannot afford everything on the (governor’s) wish list, there’s no question. … That’s what the battle will be over this year,” Marquardt said.

Richardson has dubbed 2006 the “year of the child” and has proposed expanded health coverage for children, new schools in fast-growing communities and a $17 million income tax credit to put extra money in the pockets of lower-income families.

His other proposals include funding a southern New Mexico spaceport; tougher penalties for methamphetamine sales, some sex crimes against children, domestic violence and gang activity; and a tax credit for solar energy development and creation of a land conservation fund.