February 18, 2020

Crafting of state budget could go down to wire

On Monday morning, there was a sign on a key Senate panel’s door with underlined writing in all caps.

“House Bill 2 will not be heard today,” it read.

The General Appropriations Act, also known as the main budget bill for New Mexico state government, had been on the Senate Finance Committee’s agenda for Monday but would now have to continue awaiting action, as it has for nearly since two weeks since the House passed it.

“We don’t have the amendments ready,” committee chair Sen. John Arthur Smith told The New Mexican. “It’s not an easy process when you have this many amendments.”

Indeed, the committee does have to sort through some 600 proposed amendments while it also figures out how to cut around $150 million from a House bill Smith says overshoots spending targets. But the bill has less than 72 hours to get to the finish line before the legislative session ends Thursday, and those expected reductions could make House legislators unhappy.

“It’s going to get a little bumpy, let’s put it that way,” said Smith, D-Deming. “You’re going to get pushback from the House — ‘we wanted this, we wanted that.’”

One area of discord might be roads. The House authorized some $255 million in spending on roads in its budget bill, yet Senate Finance is likely to cut that number down to around $170 million, Smith said.

Another could be teacher pay raises. While the House called for 5 percent hikes, the Senate is likely to give a smaller raise and put it on par with increases for state employees.

Yet another could be reducing from $15 million to $5 million the amount the House wants to allocate to help McKinley County deal with closure of the coal-fired Escalante Generating Station near Grants.

These changes and more are necessary, Smith said, in order to hit the target of keeping 25 percent of state funds in reserve.

“They’ll say, ‘why did you take $75 [million] out for roads?’” Smith said when asked how the House might respond to the Senate’s changes. “Well, do you want to take the reserves down?”

So, what happens next? First, Senate Finance has to actually hear the bill, which Smith says they’ll finally do on Tuesday. When the panel and the full Senate pass the budget bill — likely with these and other changes — the House will need to accept the amendments in order for the bill to move on to the governor’s desk.

If the House doesn’t, the legislation would go to a conference committee, in which several legislators from each chamber would try to come to an agreement. And if for some reason they don’t pass House Bill 2 before the end of the session on Thursday, the Legislature would need a special session to get it done.

Could that actually happen?

“I’ve seen the budget down to the wire many, many years,” said Rep. Patricia Lundstrom, the Gallup Democrat who chairs the House Appropriations and Finance Committee, which was responsible for crafting the budget on the House side. “We’re not at the wire yet.”

What does the office of Gov. Michelle Lujan Grisham think?

“We’re optimistic the Legislature will get it done,” said spokesman Tripp Stelnicki.

Lundstrom declined to comment on the specific changes that Smith said his committee will make, as did the Governor’s Office — saying they need to see an official proposal from the panel first.

“I’m just very reluctant to talk about anything if I don’t know the bigger picture,” Lundstrom said.

Senate Finance also plans to add some dollars to the bill that weren’t in the House budget, such as putting $20 million more in the early childhood trust fund and funding the governor’s proposed Opportunity Scholarship — which the House chose not to do.

However, Smith said that free college tuition proposal would receive less than $30 million.

Asked whether he thought Lujan Grisham would accept that level of funding, he said, “Well, she’s got to be happier with what we gave versus what the House gave.”

Smith added that he has been in touch with the governor on a number of budget items.

“I hope she’ll be on board with what I’m proposing to do,” he said.

Capital Outlay

While House Bill 2 sat still on Monday, legislative committees did take up and approve bills outlining specific proposed capital outlay projects throughout the state.

The House Taxation and Revenue Committee passed House Bill 349, which would fund $528.2 million in projects from bonds backed by state severance tax revenue and with some general fund monies as well.

Among the larger projects in Santa Fe County would be $9 million for a State Police facility, $3.9 million for a Santa Fe Southside teen and resource center and $2.1 million to expand a Santa Fe County recovery center program facility.

On the Senate side, the Finance Committee approved SB 207, which calls for spending $195.8 million on projects from general obligation bonds. Of that pot, about $155 million is for higher education, around $33 million is for senior centers and around $9 million would go to libraries.

Linda Kehoe, a Legislative Finance Committee consultant and capital outlay expert who testified at both hearings, told the House panel that this year’s capital outlay bills were some of the toughest such bills she has ever helped put together.

“It’s very challenging the more money we have,” she said.