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.
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.
The Legislative Council’s attorney in the lawsuit against Gov. Susana Martinez is stepping down from the case, just a day after the state Supreme Court agreed to hear oral arguments on the case. The case is challenging Martinez’s line-item vetoes to a state budget passed last month by the state Legislature. Late Monday, Thomas Hnasko filed a motion to withdraw from the case, which lists Martinez and Department of Finance and Administration Secretary Duffy Rodriguez as defendants. Hnasko is recusing himself because of a “perceived conflict of interest” and a request from the Risk Management Division of the state General Services Department. The motion says other attorneys at Hnasko’s firm, Hinkle Shanor LLP, “have been retained by [Risk Management] to defend designated state entities and employees against monetary damage and equitable claims asserted against those entities and employees.”
In a joint statement, Senate President Pro Tem Mary Kay Papen, D-Las Cruces, and House Speaker Brian Egolf, D-Santa Fe, said they believed there was no conflict.
After a year of high-profile changes in Gov. Susana Martinez’s Cabinet, top officials from several of the most important departments in state government now await Senate confirmation hearings. But the secretaries of environment, finance and health are just of a few of the governor’s nearly 100 appointees on the agenda. With the long list, it is unclear how many appointees will even get a vote before the Senate adjourns March 18. New Mexico’s financial crisis will make confirmation hearings more difficult than usual. Staff members say the Senate Rules Committee only has enough money to conduct background checks on about half the appointees.
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.
RED RIVER — The state is facing a big hole when it comes to the state budget, lawmakers were told at the latest meeting of the interim Legislative Finance Committee. The projected $325 million deficit for the current year’s budget comes in part because state revenue projections from January were off by more than half a billion dollars. A larger-than-expected downturn in the oil and gas industry made a big part of the decline. This year, the state House of Representatives passed a budget based on the January projections, but the state Senate drastically slashed that budget before sending it back to the House. But even the big cuts in the final budget for this year leave a lot to be done.