As Democrats gear up for a legislative session after retaking the state House of Representatives and expanding their majority in the state Senate, several members are looking at ways to increase New Mexico’s minimum wage. Two lawmakers have already pre-filed legislation to do so ahead of the session, which begins Jan. 17. One measure would double New Mexico’s minimum wage from $7.50 an hour to $15 an hour by January 2018. Another more cautious bill ups the minimum wage to $8.45 an hour.
The state budget situation was the backdrop of so many other stories this year and will remain a large story that NM Political Report and others will continue to cover in 2017 and beyond. Due in large part to the state’s reliance on oil and gas revenues to fund the government, New Mexico earlier this year found itself facing a large budget deficit amid plummeting oil prices. The state constitution does not allow the state to run a deficit; every year, the Legislature must pass a balanced budget. Previously: Top ten stories of 2016: 10-6; #5: NM Dems buck national trend, retake House; #4: Demesia Padilla resigns; #3: AG clears final behavioral health providers
During the 30-day regular session, the state House passed a version of the budget worth $6.32 billion, which actually included $30 million in new money. But by the time the Senate began discussing the budget, the situation worsened and the state braced for a whopping $359 million less in revenue than projected.
Media coverage of planned tax legislation has so far focused on one hot-button topic of the proposal—reinstating a state tax on food. Santa Fe Archbishop John C. Wester and advocacy groups like New Mexico Voices for Children have vocally opposed the idea. But the two state representatives behind the proposal have not actually filed any legislation on the matter for the session that begins in January. Legislators could begin introducing bills on Dec. 15.
During September’s special legislative session, lawmakers agreed on fixes that added about $23 million in revenue. That was a start, but not nearly enough to solve the state’s budget crisis. On Wednesday, state legislators received little good news about the state’s revenue stream during a committee meeting. Even with that help, New Mexico’s bean counters dropped their revenue projections for the current fiscal year from previous estimates by more than $130 million. The state’s current fiscal year began in July and ends next June.
The latest update on the state’s budget situation was filled with negative news, including a large reduction from previous budget projections released in August. The current year’s budget is projected to be $69 million in the hole. For the fiscal year starting July 1, 2017, state budget experts project $300 million less money to spend than the budget in the current fiscal year—which itself saw massive cuts during the special session, with 5.5 percent cuts to most agencies. The update, presented by experts from the Department of Finance and Administration and the Taxation and Revenue Department Monday morning to the Legislative Finance Council, comes a month and a half before legislators go back to work during a regular legislative session to deal with next year’s state budget. During a special session in September and October, the Legislature plugged a $600 million budget deficit that encompassed last year’s budget and the current budget through a combination of tapping into reserves and making cuts.
Three state agencies expressed a lack of confidence Thursday in the Office of the Superintendent of Insurance’s (OSI) ability to collect millions of dollars back taxes owed to the state from health insurance companies. State Auditor Tim Keller, Department of Finance and Administration State Budget Division Director A.J. Forte and Legislative Finance Committee Deputy Director Charles Sallee all expressed doubts in OSI’s plans to collect an estimated $193 million that it failed to collect from premium health insurance taxes from 2010 through 2015. The comments came at an interim Legislative Finance Committee hearing. “I think it’s very notable there are three oversight agencies looking at this,” Forte told state lawmakers. “There are too many inconsistencies for me to feel comfortable in this process.”
The controversy began when Keller’s office revealed the uncollected revenue in a special audit earlier this year.
What we do next may very well determine the fate of our state. Will we continue the divisive, dismissive and disingenuous rhetoric of recent months to seek political victory merely for the sake of winning? Or will we thoughtfully discuss solutions to the complex problems we face so that New Mexico might have the educated and motivated workforce that employers desire; so that millennials might stay in New Mexico or, even better, move here from elsewhere; so that the state’s chronically high poverty, crime and unemployment rates might finally drop; so that tax revenue to the treasury might increase; and so that we might spend the money necessary to improve our schools, roads and bridges, public safety and health programs, and cultural amenities Will we create a cycle of prosperity rather than continue a cycle of poverty? Making the right choice is easy; actually acting on it will be hard. This will be especially true after this election season, as our leaders must set aside personal feelings and move past the misstatements that marked the campaigns in favor of an honest, open discussion. We cannot fix a long-term imbalance between state revenue and expenditures by scraping together unspent money from various accounts any better than a family living on the edge of poverty can achieve prosperity by holding a yard sale. We cannot reduce New Mexico’s perpetually high crime rate by putting criminals who have already committed crimes in jail for longer periods of time. We cannot create jobs without social and educational systems that create good workers. It’s time for the difficult discussion we’ve delayed for years: How can New Mexico raise the money it needs to improve the education our children receive, both at home and in school, divert our young people from a life of crime toward a life of financial security and civic involvement, and support the economy and quality of life we desire? Properly addressing early childhood development, child abuse, drug addiction, alcohol dependency, mental illness, obesity and the needs of the elderly, our veterans and those with special needs—all of which is expensive—is paramount to making New Mexico a great place to live and work.
The state’s budget situation and the fix to solve a budget deficit mean that it will cost more to borrow money. That’s the news from Moody’s Investor Service. The bond-rating agency dropped New Mexico from the top rating of AAA to the next level of AA1, still a very high bond rating. According to Jeff Mitchell, the director of the Bureau of Business and Economic Research at the University of New Mexico, the downgrade itself will not be very impactful or have any significant effect on the state. “It’s not, however, a good sign,” Mitchell said.
Gov. Susana Martinez signed a bill passed during the recently-completed legislative special session that cut spending in most state agencies, but used her line-item veto authority to spare “below-the-line” funding for the Public Education Department. The bill was part of the effort to solve a budget problem that is estimated to leave the state hundreds of millions of dollars in the hole. This education funding, which restored the $22 million the version passed by the Legislature, goes towards projects of PED that are not part of the state equalization guarantee, the formula that seeks to provide equal funding per student across the state. These funds go towards programs like the controversial merit pay program as well as popular programs like “breakfast after the bell” and after-school programs.
Democrats and Martinez’s administration have clashed over some of the funding since she was first sworn in. Martinez slammed the Legislature for passing the bill with those education cuts intact (though the House version subtracted the cuts from $25 million to $22 million).
Gov. Susana Martinez signed two budget bills that the Legislature passed during the recent, contentious special session. One of those bills will move money from various funds to the general fund to pay for the budget deficit for both the fiscal year that ended in June and the current fiscal year. The bulk of that money comes from the tobacco settlement permanent fund. Martinez signed the bill without any line-item vetoes. The other bill deals with tax credits.