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.
Gov. Susana Martinez officially issued the proclamation for a special session, less than 24 hours before legislators are scheduled to gather to discuss a solution to the state’s large budget deficit and other issues Martinez placed on the call. In addition to filling the budget deficit, Martinez will allow legislators to discuss legislation to reinstate the death penalty for certain crimes, expand the state’s three strike law and life imprisonment for intentional child abuse resulting in the death of a child. Legislators can only discuss items Martinez puts on the call during a special session. The special session is necessary to deal with a nearly $600 million budget deficit from this year and a recently-completed budget year. Legislators and the governor are required by the state constitution to balance the budget each year.
There isn’t a date for the special session yet, but one non-profit that says increasing an alcohol excise tax increase can help solve the budget deficit is stepping up efforts to get it on the session’s agenda. Dr. Peter DeBenedittis, director of Alcohol Taxes Save Lives and Money, hand-delivered a letter to the governor’s office in Santa Fe asking that she put the proposal on the agenda for a special session. A special session is necessary to deal with a budget deficit nearing $500 million. Spokesmen for Gov. Susana Martinez’s office did not respond to an email seeking comment. Her public information officers typically do not respond to requests for comment from NM Political Report.
Delaying or freezing corporate income tax cuts and across-the-board budget cuts are two of the most popular proposals for bridging the state’s large budget deficit. That comes from a poll conducted by Public Policy Polling for NM Political Report. Respondents were asked to choose from a list of five options for balancing the budget. The options were “Delaying or freezing corporate income tax cuts,” “bringing back taxes on food and medicine,” “increasing the state gasoline tax,” “cutting education spending” and “enacting across-the-board spending cuts.”
After choosing their top choice, respondents were also asked to choose a second-best option from the same list. In both cases, respondents saw delaying incoming corporate income tax cuts delay and enacting across-the-board spending cuts as the two most popular choices.
Gov. Susana Martinez will call the Legislature into a special session, likely next month, to deal with the state’s massive budget problems.
The Associated Press reported the news Thursday, the first time the governor put any sort of time frame on the session. She told the wire service the special session would likely take place next month. Martinez and others say they prefer a short special session—likely one that takes just hours—to save on the costs. This means the discussions on how to deal with the budget deficit will largely take place behind the scenes, without public input or transparency. At issue is that New Mexico’s revenue plummeted along with the prices of oil and gas, which New Mexico depends on to balance the budget.