June 20, 2020

Scaled back budget heads to Senate

Over the objections of Republicans who wanted to cut more, House Democrats pushed through a scaled back state budget to shore up a $2 billion budget shortfall caused by the pandemic and oil price crash that devastated state coffers.

The House approved the roughly $7 billion budget in a 46-24 vote along party lines, with Republicans opposing the budget plan. In extended budget talks over the past several days, lawmakers continuously described the spending reductions as difficult decisions in the face of massive hits to state revenue.

Gov. Michelle Lujan Grisham has referred to the cuts as “austerity” for the state, but supported them at slightly different levels. The bill now only needs to be approved by the full Senate to get to the governor’s desk, as the Senate Finance Committee approved the House’s version Friday.

The budget bill proposes to use a combination of spending cuts, reserves and federal funding to deal with a projected $2 billion drop in state revenue for the next fiscal year. 

“For me, this is the most important piece of the session, making sure we have solvency,” Rep. Patricia Lundstrom, chairwoman of the House Appropriations and Finance Committee, said Friday.

The budget passed by the House cuts about $600 million in spending from the $7.6 billion plan passed in February, bringing the revised budget to $7 billion. That’s the same total amount of the fiscal year 2020 budget.

It’s also a bigger cut than Lujan Grisham proposed in her solvency plan, which called for a $457 million reduction.

Educators would receive pay raises of 1 percent, while state workers who earn less than $50,000 annually would also get a 1 percent salary increase, according to the bill. It’s a significantly smaller raise, down from the 4 percent pay raises in the original budget that passed in February.

The Opportunity Scholarship, Lujan Grisham’s plan to give New Mexicans free college tuition, would only get $5 million instead of the original $17 million.

Despite the reduction, Republicans, who had called for a dramatically smaller budget in February, said the budget still allows too much spending given the huge revenue shortfall.

“We don’t have a budget problem in our state — we have a spending problem in our state,” said state Rep. Candy Spence Ezzell, R-Roswell.

Ezzell also criticized the fact that the state is spending money to subsidize the Spaceport program, an effort from Virgin Galactic to offer commercial space flight.“That one is kind of a sore spot for me,” Ezzell said. “I kind of hoped that Sir Richard Branson wouldn’t be sucking off the public tit.”

The full House also approved a bill Friday that would provide tax relief to residents and businesses impacted by COVID-19.

House Bill 6, which now moves to the Senate, would temporarily waive interest and penalties for liabilities related to personal and corporate income taxes and gross receipts taxes.

The legislation would also double the temporary monthly distribution to local governments, sending more proceeds from online sales taxes to municipalities.

“The times call for a responsive set of proposals that keep our communities and local businesses at the forefront of our economic recovery,” said Rep. Christine Chandler, D-Los Alamos, one of the bill’s sponsors. 

Senate bills 

The full Senate also approved high-profile bills Friday, including an initiative to help small businesses and an election reform.

The chamber passed 26-11 a bill designed to provide financial help for small business owners and municipalities struggling to survive during the COVID-19 pandemic.

Senate Bill 3, also known as the “Small Business Recovery Act of 2020,” would invest up to $400 million in Severance Tax Permanent Fund money into a new fund that business owners could draw on for a three-year loan to help them weather financial storms brought on by the COVID-19 threat.

“Our backbone of economic development in this state are these small businesses, our moms and pops. … This is something we can do to help these small businesses hang on long enough until the recovery down the road,” Sen. Sander Rue, R-Albuquerque and one of three sponsors of the bill, said during a committee meeting on the bill. 

The legislation would allow business owners who can prove they took a substantial financial hit during the months of March and April the chance to apply for up to $75,000 with an annual interest rate of one-half the Wall Street Journal prime interest rate — currently around 1.65 percent.

The bill would also designate 1 percent of the Severance Tax Permanent Fund to provide economic relief loans for individual counties, cities and municipalities. Local governments must demonstrate they have experienced at least a 10 percent decline in gross receipts tax revenues because of closures and other financial handicaps brought on by the pandemic.

According to the bill’s sponsors, Santa Fe County would be eligible for such a loan, given it lost 17.5 percent, or some $882,000, in the past few months because of the pandemic. 

New Mexico senators also approved a bill that aims to streamline the voting-by-mail process if the COVID-19 pandemic is still ongoing during November’s general election.

Senators added an amendment that would allow independent voters to cast ballots in primary elections by registering with a major party on Election Day, potentially opening up primaries to a wider swath of the population.