June 20, 2016

Lawmakers told ‘we’re on fumes’ when it comes to the budget

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Legislators were told by the Legislative Finance Committee director Monday that the budget situation is still dire.

“We’re on fumes,” LFC Director David Abbey told the Revenue Stabilization and Tax Policy Interim Committee.

The legislators will have to deal with revenue that is down ten percent from last year, Abbey said. The state predicted a five percent drop in revenue.

Abbey said a special session may be needed to address any shortfall.

Sen. Peter Wirth, D-Santa Fe, said the Legislature should not be locked into not passing legislation that would raise taxes just because Gov. Susana Martinez said she would not sign any legislation with a tax increase.

“At some point, things that we all care about are going to be dramatically impacted if we don’t do our jobs,” he said.

While Abbey said earlier that “sweeps” of reserves were possible for some remaining money “if necessary,” Wirth wasn’t a fan.

“Relying on one-time sweeps of non-recurring money is not the way to move us forward,” he said.

One Republican legislator raised the idea of layoffs, while another said he would go against the no-tax-increase orthodoxy—to tax renewable energy.

“Sometimes you have to cut back your payroll and your staff,” Rep. James Strickler, R-Farmington said. “And that’s a big component of our budget.”

He compared the state to a business that is spending more money that it’s taking in.

Rep. Rod Montoya, R-Farmington, meanwhile, said come the next legislative session he might be happy he didn’t sign “a no-tax pledge.”

Montoya said he is exploring introducing something similar to a severance tax for renewable energy, though acknowledged there is no severance in renewable energies. He likened it to a “tax in lieu of severance.”

One of the more pessimistic legislators was, typically, Sen. John Arthur Smith, D-Deming.

The influential Senate Finance Committee chair said that if agencies don’t start slashing spending now, it could be “painful” come January, since there likely won’t be money for supplementals.

He said that there have been seven or eight years of “virtual free-fall” on the revenue side, while spending continues to increase, including on Medicaid.

“Something’s got to give.”

Abbey said that legislators would know more following an August Legislative Finance Committee meeting in Red River. There, the Department of Finance and Administration and LFC would present a preliminary revenue report for Fiscal Year 2016 as well as a look forward at Fiscal Years 2017 and 2018.

“Everybody wants to get a clear look at this year’s revenues,” he said.

Smith looked forward a little further, with possibly prophetic words about the next legislative session..

“It’s going to be an interesting January.”