For most of this year, the budget was the hottest topic for legislators and the governor. Both branches battled, then came to an agreement no one seems enthusiastic about. The deal suggested by Gov. Susana Martinez essentially amounted to using bonding money normally reserved for state infrastructure to balance the budget. State lawmakers request the bonding money for state infrastructure projects. Issuing bonds works like a home mortgage: the state borrows money backed by oil and gas revenue and pays it back with interest over the years. Senate Finance Committee Chairman John Arthur Smith, D-Deming, said the funding method “sets a poor precedent” while Senate Minority Leader Stuart Ingle, R-Portales, said he didn’t “like to do this either.”
And yet, the plan passed with a unanimous vote in the House of Representatives and just two dissenting votes in the Senate.
Without much drama or even an attempt to override Gov. Susana Martinez’s vetoes of tax increases, legislators ended a special session where a budget deal became law. The legislators in both chambers came to order around 1 p.m. on Tuesday after recessing ahead of the holiday weekend. The legislators recessed last Thursday rather than adjourn after passing bills related to the budget and taxes. Staying in session while recessed meant Martinez had to make a decision on legislation to three days instead of 20 days. Martinez ultimately signed legislation on Friday reinstating funding for higher education and the state Legislature, both of which she vetoed entirely after the regular Legislative session earlier this year.
Both the House and Senate recessed Thursday afternoon—without officially ending the special session. Now, the governor has three days to take action on four bills aimed at tax changes and reinstating funding to the Legislative branch and institutes of higher education. By recessing until Tuesday instead of adjourning, the House and Senate could still introduce new legislation to replace anything Gov. Susana Martinez might veto. Martinez, in an atypical statement, praised the Legislature for some of their work. “In a bipartisan manner, lawmakers passed my plan to put more funding toward cancer research and student financial aid, while at the same time forfeiting their pork projects and a small portion of their personal legislative retirement accounts to fill the budget hole — something I’ve urged them to do for months,” she said.
In a letter to New Mexico’s legislative leaders yesterday, State Auditor Tim Keller summarized the state’s largest tax breaks and their distribution by size. About half of the revenue that the state does not collect as a result of tax breaks comes from three sources: extractive industry tax breaks, two broad gross receipts tax breaks and the exemption of nonprofit organizations from gross receipts taxes. Tax exemptions for a range of extractive industries, such as mining and drilling, comprises 27 percent of all tax breaks and total nearly $400 million. Compiled by the Office of the State Auditor, the data came from the New Mexico Tax and Revenue Department. But finding it was not easy.
The House of Representatives passed three pieces of budget legislation Wednesday afternoon and evening with little debate. The first restored funding to higher education and the state Legislature. Earlier this year, Gov. Susana Martinez vetoed the entire budgets for both during the regular session, citing her opposition to tax increases. Two Republicans—state Reps. Jason Harper of Rio Rancho and Rod Montoya of Farmington—voiced concerns for the spending bill.
Gov. Susana Martinez met with legislative leaders Friday morning to discuss a budget fix ahead of the upcoming special session scheduled to start next Wednesday. Martinez’s spokesman, in a statement, called the meeting “productive” and said the governor is confident her office would come to an agreement on funding the coming fiscal year, “including funding for higher education.”
“The Governor reiterated that she will not support standalone tax increases, but is hopeful that we will be able to find a bipartisan path forward on tax reform,” spokesman Michael Lonergan said. The statement potentially leaves room for tax increases as a part of a comprehensive tax overhaul similar to what state Rep. Jason Harper, R-Rio Rancho, spearheaded during the recent general legislative session. Martinez last week told the Santa Fe New Mexican that she would support reinstating the food tax as part of such a reform—a marked contrast from even just two months ago when she vowed to “definitely veto every tax increase on my desk.”
State House Speaker Brian Egolf, D-Santa Fe, however, told NM Political Report that “there is still tremendous uncertainty about what sort of tax reform proposal is going to be offered during the [special] session.”
Egolf described the meeting with Martinez as “a first crack” at agreeing to a budget solution. “It wasn’t really a horse trading kind of thing,” Egolf said.
State House Republicans unveiled a spending plan for the upcoming special legislative session that would transfer $12.5 million from the state Legislative Retirement Fund to the general fund to solve the New Mexico’s budget shortfall. Martinez announced the special session will begin Wednesday, May 24. GOP House leaders announced the plan publicly in a press release Tuesday, touting it as a solution to fix the state’s budget issues without raising taxes. “This plan covers New Mexico’s budget needs for the upcoming fiscal year and increases funding for cancer care as well as support for students working to obtain a college degree,” state Rep. Larry Larrañaga, R-Albuquerque, said in a statement. “I urge my colleagues in the Legislature to adopt these proposals so we can resolve this budget impasse fairly and for the benefit of all New Mexicans.”
But the ranking lawmaker in the House Appropriations and Finance Committee questioned whether the Legislature could legally transfer money already invested the retirement fund.
Attorneys for the Legislative Council Service urged the state Supreme Court to reject Gov. Susana Martinez’s large line-item vetoes in the state budgets in a Wednesday court filing. In the latest legal argument from LCS involving its lawsuit against Martinez, a response to arguments submitted last week from her legal camp, attorneys Jane Yohalem and Michael Browde argued that Martinez’s vetoes last month violate the state constitution. Specifically, the argued that a provision that bars the governor from re-writing the annual bill the Legislature passes to fund state government. Martinez vetoed the entire budgets for the state Legislature and the state Higher Education Department. The large vetoes, the attorneys added, violate the separation of powers between the Legislature and governor established in the state constitution.
The state and labor unions representing workers in agencies possibly facing furloughs are clashing over the process of the potential forced days off. State Personnel Director Justin Najaka sent a letter Monday to Connie Derr, executive director of the American Federation of State, County and Municipal Employees (AFSCME) Council 18 asking her to meet with him “to discuss the proposed statewide furlough plan.”
AFSCME represents employees at the Motor Vehicle Division, which Gov. Susana Gov. Susana Martinez has said could face the unpaid days off along with museums and state parks. Najaka cites state administrative code stating that the plan “identifying organizational units to be affected by the furlough may be presented to the State Personnel Board for approval or may otherwise be implemented.”
Najaka then listed this Wednesday, Thursday and Friday as dates he could meet with Derr. He ended the letter by stating that if he didn’t hear from Derr soon, “the State will proceed with the implementation of the proposed statewide furlough plan.”
But in a letter sent to Najaka today in response, Derr said the meeting would be an empty gesture without adequate information showing a need for furloughs. “Without such data and narrative, we have reason to believe this will be merely a pro forma and substance free meeting,” Derr wrote, citing provisions in the union’s collective bargaining agreement with the state.
The latest New Mexico revenue projections appear to be convincing economists and state officials there is enough money to finance state government through June without resorting to government furloughs. “Based on the projections we see, yes, I think there are adequate funds,” Deputy state Treasurer Sam Collins told NM Political Report. New Mexico State University economics professor Jim Peach recently gave the Santa Fe New Mexican a similar answer. But Gov. Susana Martinez, who has been threatening furloughs for a month, had a different take. Martinez spokesman Michael Lonergan warned that the state still may not have enough cash on hand to avoid furloughs and is calling on the state Legislature to fix this in a special session.