January 20, 2017

Budget relief may place burden on schools, fire departments

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The New Mexico State Capitol, or Roundhouse, via Wikicommons.

Legislators’ last attempt to balance this year’s budget relied heavily on across-the-board cuts to state programs, but some critics of the new effort say lawmakers are placing the burden of a projected $69 million deficit on local institutions ranging from school districts to fire departments.

Discussions on a package of solvency measures continued Friday with the House of Representatives meeting for less than an hour before recessing until Saturday morning to vote on the legislation.

With an eye toward stopping cuts to schools and economic development programs, Republicans plan to propose a series of amendments.

“We don’t want to vote ‘no’ on something and not have an alternative,” said House Minority Leader Nate Gentry, R-Albuquerque.

The Senate’s own budget-cutting plan passed easily this week with bipartisan support. But there’s resistance to similar bills that Democrats have proposed in the House. Much of the pushback is from Republican Gov. Susana Martinez and local governments.

Martinez has said she will not sign legislation that cuts funding for schools and economic development programs.

School district superintendents argue that a plan by the Senate to reduce funding by about $50 million for the remainder of the fiscal year, which ends in June, would force some districts to draw down cash reserves to perilously low levels.

Santa Fe Public Schools Superintendent Veronica García said her district would absorb a reduction of about $1.9 million under the proposal.

The district could take that money out of its reserves, but “you need that operating cash to do business,” García said.

“I think we all recognize the schools aren’t going to get out of this without contributing something,” she added. “I would prefer a solvency plan that would not take school districts to dangerously low levels of cash balances.”

The governor has proposed taking more than twice as much money from the cash reserves of school districts but not to the same ratio across the board.

The cuts would undoubtedly hit classrooms, said Stan Rounds, executive director of the New Mexico Superintendents Association.

“We’re at the quick on school district budgets,” he said.

Meanwhile, fire chiefs are sounding the alarm over a proposal to use tens of millions of dollars in taxes on insurance policies. That money is usually split each year between the state’s fire departments.

Instead of divvying up the revenue, which can be a big piece of the budget for smaller volunteer departments, the state would use the money to balance its finances and then start paying departments a share of new taxes collected each month.

James Salas, president of the New Mexico Fire Chiefs Association, says the big annual payments provide greater financial stability for fire departments and are needed to for major expenses, such as vehicles and loan repayments.

Legislative staffers say the proposal would merely modernize accounting practices that are common in other areas of state government.

But the smaller payments for fire departments would rise and fall based on tax revenue each month, creating uncertainty, Salas said.

“This is going to have a huge impact for the fire services in New Mexico,” he said. “We need this operating capital for payments on equipment, fuel costs, loans.”

Salas said departments will have to turn to town, county and village governments to pay for the high-dollar purchases that would have been covered by the fund.

“The state is asking them to pick up the tab,” he said.

Legislators have proposed a similar change to a fund designated for local law enforcement agencies.

By Friday afternoon, more than 500 people had signed an online petition opposing the measures.

The solvency plan approved by the Senate would also cut funding for the Local Economic Development Act, which proponents say is a means of paying for projects such as roads and water systems that are needed to close deals with businesses interested in relocating to New Mexico. But critics call the program corporate welfare.

Senate leaders say the cutbacks are unavoidable because lawmakers have already drained reserves in other areas of state government in previous efforts to balance New Mexico’s budget.

Sen. John Arthur Smith, a Democrat from Deming who chairs the Senate Finance Committee, said the Legislature’s only path to solvency is “robbing every nook or cranny we could possibly find dollars in.”

Contact Andrew Oxford at 986-3093 or aoxford@sfnewmexican.com. Follow him on Twitter at @andrewboxford

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