June 16, 2020

GOP lawmakers advocate different approach on budget fix


New Mexico State Senate.

New Mexico House Republicans presented a starkly different plan for fixing the state budget Monday, calling for lower spending levels than the governor and a key legislative panel have proposed.

Minority Whip Rod Montoya said the state shouldn’t use federal stimulus funding to help mend its huge budget shortfall during the upcoming special session because the U.S. government hasn’t approved the use of those funds for that purpose.

“If we do pass this budget in the next several days with that in place, we will have passed an illegal budget,” said Montoya, R-Farmington.

The proposal from GOP legislators differs from the solvency plans presented last week by Gov. Michelle Lujan Grisham and the Legislative Finance Committee, which both call for using at least $700 million in federal funding to help the state shore up the shortfall caused by the novel coronavirus pandemic.

Guidance issued by the U.S. Treasury Department regarding the coronavirus relief act passed by Congress states the stimulus funding allocated to states must be used to cover costs that “are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019.”

It also says “funds may not be used to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify under the statute” and that “revenue replacement is not a permissible use of fund payments.”

“We would be using money that we weren’t authorized to use to balance a budget,” Minority Leader Jim Townsend said.

Staff members in the Governor’s Office and the Legislative Finance Committee acknowledged last week the federal government had not given approval to use the funds to shore up the budget and said they drafted their solvency plans under the assumption the state would at some point be given the green light.

If that approval is ultimately not given, the state would make up for the money by using more cash reserves, the finance committee said.

Still, House Republicans said New Mexico shouldn’t count on those funds for next fiscal year’s budget because the state would need that money to deal with another large projected budget shortfall the following year.

Instead of relying on the federal funds, the state should fix its shortfall by keeping fiscal year 2021 spending at the same level as fiscal year 2020 outlays, Montoya said.

“If we can responsibly just hold spending to 2020 levels and only increase as necessary, that means what we have to do in 2021 will be a lot less of a hard pill for folks to swallow,” he said.

In their budget plans, both the executive branch and the Legislative Finance Committee are proposing to use a combination of spending cuts, reserves and federal funding to deal with a projected $2 billion drop in state revenue for next budget year. 

Lujan Grisham’s plan proposes to reduce spending by $457 million from fiscal year 2021 budget passed earlier this year, while the Legislative Finance Committee is calling for reductions of between $587 million and $626 million.

The House Republican leaders criticized the Lujan Grisham administration and Democratic legislators for “kicking the can down the road” — arguing they were pushing the bulk of the budget problems until next year and doing so for political gain.

“Some would like to cover up and not disclose the issues before New Mexico until we get through November election cycle,” Townsend said.

Townsend and Montoya said they believed the special session should be focused on budgetary and economic matters rather than other proposals that have also been outlined by Lujan Grisham on criminal justice and voting procedures.

“We should roll up our sleeves and address the economic issues and the jobs issues facing New Mexico. That’s our single biggest task before us,” said Townsend, R-Artesia.

The Republicans said they would support an effort to help New Mexicans lessen their tax liabilities, adding they had requested the governor put it on the agenda.

Legislators have said they might propose forgiving penalties and interest for small businesses that are delayed in submitting gross receipts taxes, as well as waiving penalties and interest for people delayed on paying property taxes and personal income taxes.