According to common political wisdom, politicians should never raise taxes during an election year. However, with New Mexico's state budget picture looking bleaker, legislators are looking at solutions that mainly deal with tax increases in several areas.

And disagreements about which taxes to raise have been the major stumbling block in trying to reach an agreement over a budget package — both in the recent regular session of the Legislature and the special session, which began this week.

Democrats in both chambers of the Legislature on Tuesday spent hours behind closed doors trying to come up with enough votes to reach a budget compromise. Two Santa Fe Democrats said great progress had been made by early Tuesday night. While an increase in food taxes was very much alive, a compromise bill that made it out of the Senate Finance Committee contained measures to ease the pain, Democrats said.

But not everyone was happy — and that included Republicans in both chambers.

"We're going to raise taxes on people," said Sen. Sue Wilson Beffort, R- Sandia Park. "I think the figure is something like $238 million. We did not cut government. We're going to have a rude awakening."

By Tuesday evening, the Senate had crafted an omnibus tax bill that would raise gross receipts taxes on most goods and services by one eighth of a percent, allow local governments to raise gross receipts taxes on food, and close a New Mexico personal income tax deduction for payment of federal income taxes. That deduction is available only to state residents who itemize on their returns. The bill also would increase the amount of tax rebates for lower-income New Mexicans and allow more people to take advantage of that rebate.

Meanwhile, a House committee, which on Monday voted against a bill raising the tax on cigarettes by 75 cents a pack, did an about face and voted — along party lines — to recommend passage of the bill. The committee agreed to earmark 25 cents of the increase for education.

The Senate tax bill represents a major compromise aimed at mollifying some of the concerns of progressive Democrats who oppose raising the food tax.

Sen. Peter Wirth, D-Santa Fe, had not been happy with a proposed compromise that legislative leaders had hammered out before the special session — mostly because of the food tax issue.

But he said closing the tax deduction for those who itemize their tax returns would be a progressive move because mostly higher-income taxpayers would be affected.

Wirth said this will raise $68 million in revenue for the state. With that added revenue, the gross receipts tax rate would be increased by one eighth of a percent, not a quarter of a percentage point, which was called for in a previous compromise tax proposal.

"The food tax is a real heartburn," Wirth said. "If I could separate it out, I would."

Rep. Brian Egolf, D-Santa Fe, agreed. He also is opposed to the idea of raising taxes on food — whether it's the state or the city doing the raising. But, like Wirth, he told a reporter that other parts of the Senate bill mitigate the food tax increase.

While both Wirth and Egolf said significant progress had been made in reaching a compromise, opponents of increasing taxes on food tax said poor people will suffer.

Think New Mexico, a Santa Fe based think-tank that pushed through the repeal of gross receipts tax on food in 2004, delivered to the Governor's Office printouts of more than 500 e-mails from people opposed to raising taxes on food.

"Please do not impose a tax on food," one Santa Fe woman wrote. "I can barely pay my utilities, especially propane to heat my house and gas for my car. If I pay a tax on food, then I won't be able to pay for clothes; which are already taxed — so the state will lose the money on that sale, and other items that I won't be able to afford any more."

An Albuquerque woman wrote, "My husband and I have been out of work for a number of months, being in our later fifties we don't know when things will change. We don't get unemployment or have savings. We live on a very small fixed income ... Food costs are already one of our biggest expenses. Please do not add to our burden and thousands of other Americans in the same circumstance."

House Speaker Ben Luján, D-Nambé, said he expects the session to end today.

Contact Steve Terrell at 986-3037 or sterrell@sfnewmexican.com. Read his political blog at roundhouseroundup.com.