February 14, 2020

Senate prepared for tough decisions while cutting down budget


New Mexico State Senate.

The New Mexico House of Representatives may have passed the main budget bill, but the spending plan is unlikely to get to the governor’s desk without a slashing.

The chairman of the Senate Finance Committee is more than irked at the version of the budget the other chamber sent over. Sen. John Arthur Smith is promising to “get real aggressive” in finding areas to cut and free up needed revenue.

“I will admit that I’ve been more annoyed with this budget cycle and what was sent over to us,” said Smith, D-Deming, referring to House Bill 2. “Because of the reserve targets — they knew darn well what they were.”

When the House passed its $7.6 billion budget bill last week, it said the legislation called for stashing away 26 percent in reserves, which would be in line with Gov. Michelle Lujan Grisham’s spending plan at a time when the state is projecting sizable new revenues from oil and gas production. Yet Smith said those legislators didn’t take into account capital outlay requests and other proposed expenses that would actually knock reserves down to 23 percent — a difference of some $150 million to $200 million.

Now, Smith said his committee faces the difficult task of reducing spending in a number of areas in order to come up with enough money to get reserves back up to the target.

“The appetite for spending was just unreal and so there was not financial discipline exercised as far as I’m concerned,” he said.

Yet Rep. Patty Lundstrom, chairwoman of the House Appropriations and Finance Committee, said the budget her panel approved did in fact target reserves at 26.3 percent, and the additional expenditures Smith referred to were added afterward by the Senate.

“This same process occurs every year. The budget approved by my committee and voted out of the House accounts for our budget only and could not account for what the Senate may add in capital or other expenditures after the fact,” said Lundstrom, D-Gallup. “Senate Finance knows this, and whatever discussion they had about capital outlay, I was not a party to.”

Smith also took issue with some portions of the House budget itself. For instance, a proposal to raise teacher salaries by 5 percent likely will be cut in the Senate, as will the $15 million the House wants to allocate to help McKinley County deal with closure of the coal-fired Escalante Generating Station near Grants. The latter appropriation could fall to $5 million, Smith said.

“We’re going to try to be as fair as we know how, and that wasn’t the case when the bill came across from the House,” Smith said, referring to the proposed raise for educators. “I’ve got nothing against teachers. I’m married to one.” 

The Senate also will try to find money for programs the House didn’t fully fund or didn’t earmark money for at all. Lujan Grisham’s initiative to create an early childhood fund calls for $320 million, yet the House only gave it $300 million. Smith said the Senate will need to find $20 million to get it to its proposed level.

Also, the governor’s proposed Opportunity Scholarship program didn’t get funded at all in the House version, and Smith said the Senate will try to support that initiative, which would provide free college tuition for all New Mexicans.

The estimated costs for the program vary greatly, from as low as $26 million to as high as $62 million. Smith said his committee might shoot for a figure halfway between those two.

All of these proposals require money, and there’s not enough to go around while keeping the reserve target intact. So at this point, the Senate Finance Committee has stopped hearing bills that call for an appropriation unless a prior agreement was reached.

On Thursday, for example, the panel tabled a bill that proposed “equitable” funding among the state’s higher education institutions because the legislation sponsored by Sen. Stuart Ingle, R-Portales, asked for more than $8 million.

The Senate’s budget chiefs could be helped out by House Bill 341, which would authorize the state to access 1 percent of a rainy-day fund known as the Tax Stabilization Reserve for operational expenses. Smith said he is supportive of the bill.

Normally, the Legislature is required to call a special session to tap that fund, but this bill would allow the state to avoid that process. It was unclear Thursday, however, whether money from that fund could be used for the budget bill being debated in the current session.

Either way, Smith and the Senate Finance Committee are bracing to make some tough decisions.

“I’m going to have to do some more scrubbing,” Smith said. “That’s why I will not be very popular.”