Thursday marks the halfway point of the 2017 New Mexico Legislature’s 60-day run in Santa Fe. And while half the time is gone, perhaps 90 percent of the work remains. All-important debates over how to spend the public’s money, where to get it and how much to keep in reserve, are yet to be resolved. How much should be devoted to keeping the schools running? What kind of tax breaks are effective in stimulating a sputtering economy?
A framed newspaper clipping adorns the wall outside the office of New Mexico Senate Majority Leader Peter Wirth. The piece, dated May 25, 2002, serves as a reminder of the time when Republican Gov. Gary Johnson, who had vetoed 700 bills in six years, finally overplayed his hand. One of those vetoes was the $3.9 billion spending plan for the coming fiscal year, a 1.1 percent increase over the previous year. Johnson, a fiscal hawk, said the plan didn’t go far enough to control the growth of Medicaid. With just a few weeks left in the fiscal year, the Democratic Party-controlled House and Senate called themselves back to Santa Fe for a special session to override the veto and keep the government operating.
Gov. Susana Martinez on Thursday signed an $8.6 million bill to fund the legislative session and provide about 460 employees at the state Capitol with their paychecks this week. But Martinez also vetoed a portion of the bill that would have supplied emergency funding for the court system, prompting Supreme Court Chief Justice Charles Daniels to say there will be no money for jury trials beginning March 1. “We’re facing requests to dismiss serious criminal cases because we have not been able to provide speedy trials as our constitution requires,” he said. Martinez’s stinging message to lawmakers explaining her line-item veto on court funding demonstrates how partisan mudslinging has stalled even basic governance during this 60-day session. The funding bill for the legislative session typically is approved and signed as a routine matter, but New Mexico’s financial crisis means this session is anything but ordinary.
The state House of Representatives agreed Monday evening to soften the financial blow to New Mexico’s public schools. With little discussion, House members voted to scale back cuts for districts and charter schools from a total of $50 million to about $38 million during the next five months. The cuts would be a big part of balancing the state’s budget. Proposed by Rep. Patty Lundstrom, D-Gallup, the change ensures that each district or charter still has cash reserves of at least 4 percent of its budget. Those beneath 4 percent in reserves would not face cuts.
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.
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.
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.
Showing possible signs of movement from the Senate Monday, the chamber’s majority and minority leadership have been spotted around their respective offices in the Roundhouse even though the chamber voted to adjourn early Saturday morning. Senate Majority Leader Michael Sanchez, D-Belen, told NM Political Report Monday that he, President Pro Tem Mary Kay Papen, D-Las Cruces, Minority Leader Stuart Ingle, R-Portales, and Sen. John Arthur Smith, D-Deming, are among the senators who returned to the state capitol building as the House hears, and amends, budget bills originally sent from the Senate. Sanchez wouldn’t go into detail about what they were doing or if they are going to hear any House bills, but confirmed there is some sort of conversations happening. “We’re visiting, trying to figure some things out,” Sanchez said. Sanchez didn’t say if they were speaking to the House.
A House committee held off on any changes to a bill providing big cuts across most state agencies to give lawmakers and the public more time to review the deal. This came even as the panel, the House Appropriations and Finance Committee, approved a bill to shift capital outlay funds for infrastructure projects and another to sweep unused reserves to the general fund to shore up the state’s large budget deficit. While the amendment to deepen some cuts, and halt others, did not go forward it will likely be the structure for a version to be heard on the House floor, as early as Monday. The proposal on the bill to cut spending would have deepened cuts for many state agencies. The committee amended the Senate bill that provided spending cuts to cut most state agencies by 5.5 percent instead of the 5 percent in the original Senate version.
Two House committees passed four Senate bills, three with no changes, but the one bill that must pass this year to balance the books on the budget for the year that ended three months ago passed with a change. If the bill passes in the amended form, the Senate would need to resolve the differences created by the House Appropriations and Finance Committee before it heads to the governor. In a bill that moves over $200 million from various funds, largely the tobacco settlement permanent fund, the change moved $1 million more from a legislative account. “I don’t want to say it’s a political movida, but it sounds to me like it’s a political movida,” Rep. Christine Trujillo, D-Albuquerque, said before the committee approved the changes. “If we don’t make an effort to increase our reserves, our bond rating is in danger of being down-rated,” committee chair Larry Larranaga, R-Albuquerque, said.