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.
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.
ByJohn Arthur Smith, Steven P. Neville, Mary Kay Papen |
We and other legislators had hoped that the regents of New Mexico State University, in accepting the recently announced retirement of Chancellor Garrey Carruthers’ at the end of his contract next year, nonetheless would ask him to stay on for two more years. Chancellor Carruthers’ record of vision and leading the institution is outstanding, and big challenges lie ahead. The university needs him. Senator John Arthur Smith (D-35-Doña Ana, Hidalgo, Luna, Sierra) is the Chair of the New Mexico Senate Finance Committee. Senator Steven P. Neville (R-2-San Juan) serves on the New Mexico Senate Finance Committee.
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.
How New Mexico educates its children will be in the hands of a state judge soon as a landmark trial against the state Public Education Department wraps up. Over eight weeks, the trial has featured dozens of witnesses and numerous citations to academic studies and policy reports. But in the end, the trial before First Judicial District Judge Sarah Singleton in Santa Fe boiled down to dueling worldviews. The plaintiffs — the New Mexico Center on Law and Poverty and the Mexican American Legal Defense and Educational Fund (MALDEF) — cited education outcomes for low-income, Native American and English language learners as evidence that New Mexico does not meet its constitutional obligation to provide a sufficient education for all children. This story originally appeared at New Mexico In Depth and is reprinted with permission.
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.
It isn’t often that a bill that it seems no one likes passes a legislative chamber, but that happened Wednesday afternoon in the Senate with two different bills. The chamber voted 36-3 to pass a bill that would essentially borrow money to balance the budget, something that no senator said they were happy about. Update: Added information on a third bill passed by the Senate
The Senate also passed a tax package on a 25-16 vote that included an increase in the gas tax and the motor vehicle excise tax as a way to shore up depleted state reserves. Borrowing money to balance budget
Senator John Arthur Smith, D-Deming, and Senate Minority Leader Stuart Ingle, R-Portales, each mentioned the idea of using severance tax money to help balance the budget came from the governor’s office. “We do not think it is very responsible, it sets a poor precedent…But in an effort to try and find forward movement with the executive branch, we have swallowed that bill and are willing to do it,” Smith said.
A House panel passed a bill to restore funding vetoed by Gov. Susana Martinez for next year for higher education, courts and the state Legislature Wednesday afternoon. Meanwhile, tax packages that would increase taxes on things like internet sales and gasoline also moved forward. The budget vote came mostly on party lines save for state Rep. Sarah Maestas Barnes, R-Albuquerque, who joined Democrats in supporting it. Maestas Barnes was also the lone Republican to vote for a failed override attempt of Martinez’s budget vetoes earlier in the day. In total, the bill appropriates roughly $765 million—$745 million for higher education and $19 million for legislative offices—for the next fiscal year, which begins July 1.
Attempts to override Gov. Susana Martinez’s vetoes of money for higher education and the Legislature failed in the first hour of the special session. Both the House and Senate moved quickly to attempt the budget veto overrides, a rarity in New Mexico politics. In the House, state Rep. Sarah Maestas Barnes, R-Albuquerque, was the only Republican to join all Democrats in voting for the override. The final vote tally was 39-29; the measure needed two-thirds of lawmakers present, or 45 House members, to vote yes to pass. The motion failed in the House with no debate.