SANTA FE, N.M. (AP) - Republican Gov. Susana Martinez is proposing $55 million in tax cuts for businesses and veterans as part of her budget recommendations to the Legislature.

Martinez on Thursday outlined a $5.6 billion budget that would increase spending by 3.6 percent or $194 million in the fiscal year starting July 1.

The Legislative Finance Committee has proposed a 4.6 percent or $250 million budget increase, and no tax cuts.

The governor recommends lifting the gross receipt tax on 40,000 small businesses and exempting some transactions involving construction and manufacturing companies to lessen the pyramiding of the tax.

Martinez proposes a tax credit for New Mexico companies that hire veterans returning from military deployments and exempting part of a veteran's pension from income taxes.

The proposals must pass the Legislature to become law.

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