Last-minute shuffles cement state budget deal

It took moving a few million dollars here and putting a few million dollars there, but New Mexico had a budget by the end of Wednesday. A $6.3 billion spending plan is on its way to Gov. Susana Martinez after the Senate and House of Representatives brokered a compromise on slightly different budgets approved by both chambers. The compromise won bipartisan support in the House and Senate, a marked departure from recent years when financial shortfalls led to spending cuts and intensely political clashes over state spending. Meanwhile, a spokeswoman for Gov. Susana Martinez signaled that she would be receptive to the budget. That is different from last year, when she vetoed much of the annual spending plan, at one point threatened a government shutdown and ultimately forced a special session.

Senate committee caves to governor’s demand for more police pay, DA funds

A Senate committee bent Saturday to calls by Gov. Susana Martinez for more funding for state police pay and the District Attorney’s Office in Albuquerque, as well as calls from some fellow lawmakers to restore at least some of the funding cut from school districts last year. In announcing its version of the budget passed by the state House of Representatives late last month, the Senate Finance Committee seemed intent on maintaining the tenuous peace that has set in at the Roundhouse in the wake of the partisan clashes of the last few years. The budget would amount to about $6.3 billion and, according to the Senate Finance Committee, leave reserves around 10 percent. It would amount to about a 4 percent increase in spending over the current fiscal year. The House passed its version of the spending plan by a vote of 65-3 on Jan.

Lawmaker says public schools need more funding

If state Sen. Bill Soules had his way, New Mexico would invest an extra $375 million in public schools right now. Where the cash-strapped state would find that money is another matter altogether. Soules, a Las Cruces Democrat, has once again introduced legislation calling for the state to follow the recommendation of a decadeold study and funnel hundreds of millions of dollars more into its public education system — one that generally ranks at or near the bottom in most national reports. But Soules’ bill doesn’t have a chance in the upcoming legislative session. And he knows it.

Martinez backs congressional tax overhaul efforts

Gov. Susana Martinez joined 20 Republican governors in support of federal tax cuts. The letter to Senate Majority Leader Mitch McConnell, R-Kentucky, and Speaker of the House Paul Ryan, R-Wisconsin, didn’t advocate for either plan passed by the House or Senate, but instead called for general principles in a tax overhaul. The House and Senate each passed different plans, necessitating a conference committee for the two to reconcile language. The narrow Republican majority complicates the measure, as does the House Freedom Caucus, a bloc of hardline conservative Republicans in the House, including New Mexico’s Rep. Steve Pearce. They touted tax cuts made since 2011, and the economic growth they say the cuts caused.

Cautious optimism as state’s budget situation improves

New Mexico finally received some good news on the budget after two years of sharp downward trends. Of course, recovering from those losses will still take time. This morning, two cabinet-level secretaries and the Legislature’s top economist presented revenue estimates to the Legislative Finance Committee that project the state will have $199 million in new funds for the budget next year. Presenters warned they were only cautiously optimistic on the budget surplus because of a number of potential risks that the state has little to no control over. The news is better than what the committee heard in August, and the revenue is expected to come from larger-than-previously-expected growth revenues from personal income taxes, corporate income taxes and money received from the oil and gas industry.

GOP tax bill could put giant hole in NM’s budget

The tax bill Congress is considering could blow up New Mexico’s budget—as early as next year. New Mexico Senate Finance Committee chair John Arthur Smith, D-Deming, and House Appropriations and Finance Committee chair Patricia Lundstrom, D-Gallup, sounded the alarm with a letter to members of the congressional delegation and Gov. Susana Martinez. The two wrote the state could lose nearly $600 million in federal funding in the coming year, including over $430 million in federal mineral leasing payments. This is money the federal government pays to states for oil and gas drilling and coal mining on federal lands within their borders. “Loss of FML revenues, which primarily fund public education in New Mexico, would have a devastating impact on the state’s budget and would wipe out the reserves our state has struggled to rebuild,” the two legislators wrote.

New Mexico isn’t ready for the next recession

The question isn’t if there will be another recession, it’s when the next recession will hit. And a new report finds that New Mexico is among the most ill-prepared states for an economic downturn. Moody’s Analytics analyzed all 50 states to find out which are best- and least-prepared for the next recession. Performing “stress tests” on each of the states’ budgets, the risk management company looked at how drops in tax revenue and increases in Medicaid spending from a recession would impact state spending—and if states had enough reserves to weather a moderate or severe recession without raising taxes or cutting spending. Senate Finance Committee Chairman John Arthur Smith said one clear indicator that New Mexico isn’t ready is the state has “never fully recovered from the recession when the rest of the nation has.”

The inability to recover from the Great Recession shows that the next recession “should be around the corner” according to Moody’s Analytics.

New Mexico’s reserves among lowest in the nation

New Mexico’s savings keeps dropping —and now the state has one of the smallest cushions of any state in the nation. Even now, those reserves are still well below pre-recession levels. If no new money were coming in and the state government could rely only on those reserves, there would only be enough cash to run the state for 8.4 days. That’s according to The Pew Charitable Trusts and its analysis of states’ fiscal health. In Fiscal Year 2016, the amount of money New Mexico held back and put into savings—to pay for unexpected expenses or shore up the budget when revenues dip—was at its lowest level since 2000, according to Pew.

Report shows state was double-counting permanent fund money for years

An annual audit of the state’s finances found that officials had double-counted over $750 million dollars. And that’s not the first time something like this has happened. That’s the most striking finding from an audit of the state’s Comprehensive Annual Financial Report, which gives a detailed picture of the state’s fiscal situation, for the fiscal year that ended in mid-2016. Auditors gave the report a “disclaimer of opinion,” which means there are significant enough problems that they cannot give a valid opinion on the report.[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]The state’s best environmental coverage. [/perfectpullquote]This is the fourth consecutive year that auditors gave the CAFR a disclaimer of opinion.

Discussing the special session’s budget deal, tax overhaul failure

This week, NM Political Report editor Matthew Reichbach was on Here & There with Dave Marash, discussing the recent special legislative session. The show appears on KSFR in Santa Fe and is available online for free. Legislators met during the brief special session to address the state’s budget, making sure it would be balanced, as required by the state constitution. One piece of legislation, championed by Gov. Susana Martinez and agreed to by reluctant legislators, used severance tax bond money to help cover a budget hole. Reichbach and Marash also discussed a tax overhaul proposal that did not clear a House committee.