Projection says $1.17 billion in new money, but analysts urge caution

TAOS — The interim Legislative Finance Committee heard the latest rosy budget projections, which show revenues from booming oil and gas activity leading to $1.17 billion in new money for the next fiscal year, bringing total revenue to $7.3 billion. But analysts cautioned the surplus is the result of increasing reliance on oil and gas revenues—which are notably volatile. Because of this, they recommended setting aside at least 20 percent of the revenue in reserves in case of another crash in the oil and gas market or a recession. Legislators will decide during next year’s legislative session what to do with the revenues. In the past, when oil and gas prices fell, previous reserves weren’t enough to make up for the losses and legislators had to cut the state budget.

For contracts, New Mexico increasingly looks elsewhere: Analysis finds growing reliance on out-of-state vendors

Billions of taxpayer dollars have flowed out of state since 2013 due to government purchases that are not filled — or cannot be filled — by New Mexico companies, a Searchlight New Mexico analysis finds. Over the past five years, 43 cents of every dollar the state paid companies and consultants went outside New Mexico’s borders, according to Searchlight’s analysis. That price tag stands at $3.2 billion and is growing. According to the state’s own data, spending on outside vendors grew faster than spending on in-state vendors over the past five years of Gov. Susana Martinez’ administration. That dynamic is unlikely to change without a significant overhaul of the state’s economy, according to several experts interviewed for this article.

With 2019 deadline looming, opportunity to rein Gila diversion spending tightens

New Mexico legislators tried to understand what’s happening with plans to divert water from the Gila River during a committee meeting earlier this week. While the Senate Conservation Committee will hear related bills later this session, they first requested an update on the project’s plans and a recently issued engineering contract. At its January meeting, the New Mexico Interstate Stream Commission (ISC) approved the New Mexico Central Arizona Project (CAP) Entity’s request to issue a quarter-million dollars in contracts for the diversion project. One of those contracts, for $150,000, is for Occam Consulting Engineers, Inc.

That company is owned by Scott Verhines, who was appointed State Engineer by Gov. Susana Martinez in 2011. As an ISC member, Verhines voted in 2014 to move forward with the diversion rather than use federal money for conservation and efficiency projects in the region.

Ceremonial measures: Building camaraderie but squandering time

At the end of every legislative session, there are dozens of bills that die on the House or Senate floor. When asked what happened, legislative leaders invariably shrug their shoulders and say, “We just ran out of time …” Which is true. But in the days and weeks that lead to the last moments of a session, lawmakers eat up untold hours — joking around, talking sports, engaging in ceremonial activities and spending time on legislation that doesn’t have the force of law. Call these activities “time bandits.”

Funding issues put pre-K providers at odds while young children miss out on early education

ANTHONY — A tall chain-link fence splits the preschool campus behind Anthony Elementary in southern New Mexico: federally funded classrooms on one side, state-funded classrooms on the other. The fence serves as a literal and symbolic divide segregating two sets of classrooms outfitted with the same child-size tables, chairs and toys; two sets of highly trained teachers; two separate playgrounds — and a bitter competition for 4-year-old children. As New Mexico has expanded early education for toddlers over the past decade, the state has created a system that bars providers from mixing state and federal funds in the same classroom. It’s a policy – not a law – that effectively separates kids into rival programs, often divided by income. Head Start serves the lowest income families in New Mexico; the state programs serve families from a range of income levels.

Governor calls for tax reform in State of State speech

Gov. Susana Martinez signaled Tuesday she is not going quietly into her last year in office, opening a 30-day session of the Legislature with a State of the State address that touted issues she has pushed throughout her administration and steeling herself for one last showdown with Democratic lawmakers. The two-term Republican governor called for comprehensive tax reform but did not offer any specifics on what that might involve, urged tougher criminal sentences and raised many of the same education and economic policies she has regularly mentioned in her annual address. With the state’s finances improving, offering a reprieve from another round of budget cuts, many Democrats and Republicans alike had come to expect this monthlong session would not be marked by any particularly ambitious initiatives or changes in policy as Martinez prepares to leave office. Instead, many seemed ready to approve a balanced budget and take steps to try to stem the state’s rising crime rates. Indeed, the governor did not offer any big new ideas.

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.

State’s top water official gives legislators optimistic brief on water dispute with Texas

The Legislative Finance Committee held its September meeting at Spaceport America, surrounded by cattle ranches and seemingly endless expanses of mesquite. On Thursday afternoon, legislators were updated on an issue that doesn’t involve rockets or space travel—but is critically important to the state’s future: the Texas v. New Mexico lawsuit in the lower Rio Grande. In 2013, Texas sued New Mexico and Colorado in the U.S. Supreme Court, alleging that New Mexico was taking water that legally should flow to Texas under the terms of the 1938 Rio Grande Compact by allowing farmers to pump groundwater connected to the river. Were the Supreme Court to side with Texas, it could force some southern New Mexico chile, pecan and cotton farmers to stop pumping groundwater. Or, the state could even wind up paying Texas up to $1 billion in damages.

Legislators to attempt tax reform, but it won’t be easy to pull off

New Mexico legislators are seeking to overhaul a key part of the state’s tax code in next year’s legislative session, but doing so will be difficult.

That’s according to members of the New Mexico Legislature’s interim Revenue Stabilization and Tax Policy Committee after they heard a presentation from state experts on tax reform efforts and an update on an independent study on tax reform in the state. Legislators have been looking at reforming the state’s Gross Receipts Tax, a key source of revenue. Earlier this year, the state hired Ernst & Young, in partnership with Georgia State University, to take a look at how changing the state’s GRT might affect revenue. Legislative Finance Committee analyst Jon Clark said analysts will examine a tax reform effort sponsored during this year’s special legislative session by Rep. Jason Harper, R-Rio Rancho. Harper took a crack at tax reform when he introduced House Bill 8, a massive 400-page bill which would have lowered the gross receipts tax while eliminating most deductions.

Legislative analysis shows ‘technical error’ in tax overhaul could have cost state big

If it had passed in its original form, the tax overhaul supported by the governor and legislative Republicans during the recent special session would have hurt the state. That’s the news from the finalized fiscal impact analysis done by staffers with the Legislative Finance Committee, first flagged by the Albuquerque Journal. According to the analysis, a technical error on the part of the bill’s drafters threw off revenue estimates by more than $100 million. The error had to do with the repeal of a nonprofit receipts exemption that applies to nonprofit organizations, including hospitals. The bill itself was finalized shortly before the special session began and was introduced hours after the special session came to order.