July 21, 2016

Smith: Special session needed because of shortfalls

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The New Mexico State Capitol, or Roundhouse Wikicommons.

A high profile legislative leader and the State Treasurer are urging the governor to call a special session to deal with a worse-than-expected fiscal situation in the state.

iStock_000001334173_SmallSenate Finance Committee Chairman John Arthur Smith said in a capitol press conference that lawmakers need to inject an additional $200 million to keep the current budget, which went into effect this month, balanced. Smith said he thought the state would face a shortfall of $500 million in next year’s budget.

These predictions came after the most recent numbers showed revenues fell $58 million in May 2016 when compared to May 2015.

Smith, D-Deming, predicted state revenues this year will amount to $5.7 billion, down from the $6.1 billion signed into law earlier this year. Money would also be needed  to replenish reserves, which were already hit hard when Legislators raided them to help balance last year’s budget.

State Treasurer Tim Eichenberg told the Santa Fe New Mexican the state could face trouble paying the bills.

“This situation needs to be addressed to ensure that critical functions of government are not interrupted — such as schools, police, prisons, health and human services, and payroll to state employees,” he said.

Smith said a special session is necessary and would likely sweep up the remaining money in reserves, including the full Tobacco Settlement Fund, and that Legislators and the Govenror would need to look at “reductions, new revenues and clawbacks.”

Smith said the budget problems primarily came from the industry New Mexico relies on the most: the extractive, or oil and gas, industry.

“The uptick in tourism, the uptick in healthcare employment isn’t offsetting the income generated from the extractive industries,” Smith said.

Gov. Susana Martinez is the only state official who can call the Legislature into a special session. Lawmakers can call themselves into an “extraordinary session,” but that would require three-fifths of legislators in both the House and Senate to sign on. This has only happened once in the state’s history.

NM Political Report reached out to spokesmen for Martinez to see if her office was considering a special session. We’ll update this post if we hear back from them.

Smith said he spoke with members of Martinez’s office and sent a letter and hoped the Executive and Legislative leadership could work together to come to an agreement before a special session.

“Cuts alone are not going to carry the day,” Smith said he told members of her administration.

He also said members of Martinez’s office asked if he was calling for a special session sooner or later, and he responded, “If you want to be responsible, it better be sooner.”

Smith admitted legislators wouldn’t want a special session to take place months before they all are up for election, but that the state constitution requires a balanced budget.

Interim Committee hearing

The press conference came just after legislators on the Revenue Stabilization and Tax Policy Committee, including Smith, heard the latest available budget numbers. Jon Clark, an economist with the Legislative Finance Committee, told the committee that state gross receipts taxes are down $138 million. Mining, which includes oil and gas, is down 45 percent, Clark told the committee.

“We rely much less on property taxes than most states,” Richard Anklam, president and executive drector of the New Mexico Tax Research Institute, said in the committee hearing. “We have a relatively high reliance on severance taxes.”

  Letter from Sen. Smith to Gov. Martinez by New Mexico Political Report on Scribd