Senator Proposes Bonds For Budget Deficit

New Mexico – A Senate leader is proposing a new type of state bond that could help in balancing the budget without big tax increases.

Majority Leader Michael Sanchez, a Belen Democrat, introduced legislation Tuesday for issuing up to $500 million in short-term revenue bonds, which would be purchased as an investment by New Mexico's permanent funds.

The bonds and interest are paid back with a share of tax money that flows into the state's main budget account.

The proposal could provide some relief for legislators considering spending cuts and hefty tax increases to plug a budget gap. There is a trade-off, however.

Diverting a portion of future revenues to repay bonds will mean less money available in coming years to spend on education and public services.

Copyright 2010 The Associated Press.