February 22, 2019

House sends $7B budget plan to Senate

The state House of Representatives approved a $7 billion budget on Thursday, sending to the Senate a plan for the next fiscal year that would provide nearly half a billion dollars in additional funds for public schools but which Republicans say amounts to an outsize increase in government spending.

House Bill 2 would mark an 11 percent bump in New Mexico’s budget, drawing on a surplus fueled by an oil and gas boom. That would leave about 22 percent of the state’s general fund in reserves, a far higher level than in recent years when the state burned through cash amid a stagnant economy and a bust in the oil business.

In arguing for the spending plan Thursday, Democrats depicted the budget as a response to what they described as years of austerity and cuts under former Republican Gov. Susana Martinez and as a big step under a new administration towards meeting a judge’s order that the state improve education for at-risk students.

“The message is clear. New Mexico is ready. This is our time,” House Speaker Brian Egolf, D-Santa Fe, told reporters. “This is a new chapter starting today and this budget is delivering on the promises we have made over the last year — giving our children a world class education and making New Mexico an economic example for the country.”

Republicans countered that the proposed increase in state spending is too big and would require either tax hikes or spending cuts when the bottom falls out again of the boom-and-bust oil industry.

GOP lawmakers in the House offered their own version of the budget when the chamber took up House Bill 2 for a vote Thursday afternoon.

Under the Republican plan, state spending would have increased about 5 percent and some of the government’s surplus would have been divvied up to give every New Mexican $200. It would have left about 33 percent of the state’s general fund in reserves.

In turn, the House Republican budget would not have provided the same raises for many state employees that Democrats have proposed. And the House GOP spending plan would leave budgets flat for some agencies.

But Republicans argued this would be more sustainable while still addressing some of the demands for more funding for education.

“I want to make sure we’re not putting ourselves in a position in the future where we have to cut or take back or raise taxes,” said Rep. Jason Harper, R-Rio Rancho.

House Appropriations and Finance Committee Chair Patricia Lundstrom, D-Gallup, countered that keeping a third of the state’s general fund in reserves would be like hoarding dollars.

“I don’t believe it grows the economy to put money in savings accounts,” she said. “I believe it grows the economy to put people to work.”

The House voted down the Republican proposal with a vote of 44-24.

The chamber voted 46-23 to approve the version of the budget sponsored by Democrats.

Rep. Jane Powdrell-Culbert of Corrales was the only Republican to vote for the bill.

House Bill 2 would ratchet up funding for public education to $3.25 billion, providing 6 percent raises for teachers and other school employees while also increasing funds for at-risk students and pre-Kindergarten.

That is close to what Gov. Michelle Lujan Grisham called for in her proposed budget and Democratic leaders said they expect the additional funds will show a state judge that they are working towards meeting an order to improve the quality of instruction for at-risk students.

“We are taking now the first step in a multi-year solution,” Egolf said.

House Bill 2 would also provide a nearly 6 percent boost in funding for higher education, with pay raises averaging around 4 percent and $1.5 million for dual-credit programs.

The proposed budget would also provide 4 percent raises for many other state employees, which Democrats argued is key to improving staffing at agencies that have seen shortages of personnel in recent years.

The proposed budget calls for a 10 percent increase in funding for the Children, Youth and Families Department, with significant increases for child protective services.

The Department of Health would get an additional 7 percent in funding, too, mostly for providing services to people with developmental disabilities, changes in payments to providers and for the Family, Infant, Toddler program.

The bill would also pour $256 million into major road projects around the state.

While House Bill 2 as approved by the House would deliver on a lot of the priorities that Democratic legislators and the new governor campaigned on during last year’s election, it still must pass the state Senate, where fiscal hawks hold considerable sway.

And some proposed spending is already standing out as likely targets for attacks during the next election or even as points of contention within the Democrats’ own coalition of supporters.

Republicans have pilloried House Democrats, for example, for proposing to spending $150 million to pay off tax credits owed to the film industry.

Some labor leaders are also questioning the idea, which was not included in the budget but will likely be addressed in other legislation before lawmakers adjourn on March 16.

“State employees have been suffering under 10 years of austerity,” said Dan Secrist, executive vice president of the Communication Workers of America Local 7076, which represents employees in several state agencies.

Secrist argued that money should go towards bigger raises for state employees — 6 percent across the board — asserting that spending tens of millions of dollars to pay off the film tax credits would amount to shipping cash out of state rather than putting it in the pockets of workers in New Mexico.

“What’s the hurry to pay off the film producers?” Secrist said. “We’ve got some serious issues with where the priorities are here.”