April 25, 2017

Despite favorable economic forecast, Guv’s office says furloughs still on the table

Andy Lyman

The latest New Mexico revenue projections appear to be convincing economists and state officials there is enough money to finance state government through June without resorting to government furloughs.

“Based on the projections we see, yes, I think there are adequate funds,” Deputy state Treasurer Sam Collins told NM Political Report.

New Mexico State University economics professor Jim Peach recently gave the Santa Fe New Mexican a similar answer.

But Gov. Susana Martinez, who has been threatening furloughs for a month, had a different take.

Martinez spokesman Michael Lonergan warned that the state still may not have enough cash on hand to avoid furloughs and is calling on the state Legislature to fix this in a special session. The governor still has not set a date for the special session.

“We need to address this as soon as possible or we’ll be forced into a government shutdown—reducing hours at or closing [Motor Vehicle Division] offices, parks and museums,” Lonergan wrote in an email to NM Political Report. “In the meantime the administration is taking steps to reduce the impact—through a hiring freeze and developing furlough plans. We’re hopeful we won’t have to resort to that, but we need to be prepared—just in case.”

The revenue report, released last Friday by the Legislative Finance Committee, projects that the state will end the current fiscal year $55 million above the December estimate of $5.6 billion in recurring revenues. The current fiscal year ends June 30.

The LFC report largely attributes the modest revenue uptick to an “apparent rebound of the oil and gas industry.”

Apparent may be the correct word to use. While the number of active oil rigs are up to 58 from just 19 a year ago, the price of oil is still at just $49.23 a barrel. That’s still less than half of the $108.51 per barrel price in June 2014, right before the energy market started declining.

Suzan Reagan, the senior program manager at the University of New Mexico’s Bureau of Business & Economic Research, called the uptick in active oil rigs “a good sign” for the local economy.

“But a fantastic sign would be the cost of oil going up, too,” she said.

State Sen. John Arthur Smith, D-Deming, who chairs the powerful Senate Finance Committee, said the LFC report shows there is “no justification for putting the brakes on the 2017 budget.” He also said the LFC revenue projections show furloughs are unnecessary.

Earlier this month, Martinez line-item vetoed state lawmakers’ entire fiscal year 2018 spending plans for higher education and the state Legislature. Martinez justified her vetoes by calling the Legislature’s budget plan a “massive tax increase” on “New Mexico families.”

She also accused legislators of not appropriately funding the remainder of the state’s current fiscal year and said they would have to solve the situation in a special session.

But Smith said it now may be “a while” before Martinez calls lawmakers back to Santa Fe.

“We’re a couple weeks away from doing anything in the way of a special session,” Smith told NM Political Report.

This waiting game, and the tension between legislators and the governor, is compounded by the state Legislature’s lawsuit challenging the constitutionality of Martinez’s line-item vetoes. On Monday, the state Supreme Court agreed to hear oral arguments for the case on May 15.

Meanwhile, Democrats in the state House of Representatives are petitioning all members to call an extraordinary session, in which the Legislature can set the agenda on its own terms.

That requires three-fifths of the members in each legislative branch to sign on.

House Speaker Brian Egolf, D-Santa Fe, told NM Political Report that he believed every Democratic House member is in favor of an extraordinary session. But he wasn’t aware of any Republicans who have signed the petition.

Andy Lyman contributed reporting.