December 28, 2016

2016 Top Stories #2: State budget situation worsens

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 Senate eventually passed a pared-down $6.2 billion budget bill. And this came hand-in-hand with “sweeps” of the state reserves and other one-time funds to cover state expenses.

But that wasn’t the end of the story.

In Red River this August, legislators were told of a projected budget deficit of more than $450 million across two budget years.

Legislators called for a special session, which Gov. Susana Martinez said she wanted to be a short session. Martinez said she hoped that legislators would come into the session with a deal already in place to avoid wasting time and money.

Then, she put multiple crime bills to increase penalties on the call as part of the special session, injecting even more drama into the fraught process (the special session itself ranked number 6 on our list of top stories of 2016).

All this came just weeks before Election Day, with every district in both chambers up for election.

The Senate came into the special session, passed their own bills aimed at balancing the budget and went home. They weren’t even in the Roundhouse for 24 hours.

The House, on the other hand, spent days debating crime bills and eventually finished the session by passing their altered versions of the Senate’s budget bills. The Senate concurred, sending the budget bills to Martinez’s desk.

Martinez signed the bills (but rescued $22 million in cuts for priorities of her education secretary).

As for the future, Legislators cannot use state reserves to use as a band-aid for the budget’s red ink because they are depleted.

The state aims for reserves to be equal to 10 percent of state spending to account for fluctuations in the oil and gas industry. Instead, reserves are currently in negative territory.

Legislators will gather in January for a 60-day regular session and face a budget situation that could be worse than 2016.