Governors don’t usually sign a budget twice in one year. But this is no normal year.
Gov. Michelle Lujan Grisham gave her blessing to New Mexico’s revised budget legislation Tuesday, but she also used her veto power to cancel some of the cuts legislators approved during the special session.
“We must recalibrate our state’s budget to meet these challenging times,” Lujan Grisham wrote in a letter to the state House of Representatives upon signing House Bill 1. “However, we should not lose sight of the important work that is still needed to create lasting opportunities for all New Mexicans.”
The budget plan uses 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, which begins Wednesday.
The huge shortfall has been caused by the oil price crash and novel coronavirus pandemic, and plugging the hole was the main reason legislators convened at the Capitol for the emergency session that ended last week.
The governor vetoed over $30 million in budget cuts that legislators had approved, mostly in education but also in economic development and elections.
The state will draw on its cash reserves to pay for the areas that will no longer be cut, lowering reserves from 12 percent to 11.3 percent of spending levels. Reserves had been targeted at 25 percent before COVID-19 hit.
Under state law, governors can perform line-item vetoes on the budget, meaning they can strike individual parts of appropriations bills.
The cuts to education approved by legislators but reversed by Lujan Grisham include $5 million for the state’s new early childhood department and $8 million to develop “culturally and linguistically appropriate instructional materials.”
The governor also undid a $5 million cut to the Opportunity Scholarship, a program she had proposed last year that aims to provide free college tuition for New Mexico residents at state schools, as well as restoring $6 million in economic development spending. She restored a $500,000 appropriation for the secretary of state’s elections program and $400,000 for the state engineer.
Educators will keep the 1 percent pay raises that were approved by lawmakers but are significantly smaller than the 4 percent increases in the original fiscal year 2021 budget. Spending for most state agencies will still fall by 4 percent.
Lawmakers approved an initial $7.6 billion budget in February. Only weeks later, an oil price war and the COVID-19 pandemic put that plan in peril.
The final revised budget signed by the governor reduces spending by $415 million, less than the over $600 million in reductions called for by the Legislature.
Rep. Patricia Lundstrom, the House’s chief on budgetary matters, said Tuesday the vetoes were “something we can live with,” and she was glad reserves remained above 11 percent.
“It could have been a lot worse,” said Lundstrom, a Gallup Democrat who is chairwoman of the House Appropriations and Finance Committee. “In terms of the vetoes, there wasn’t anything that’s earth-shaking.”
Sen. John Arthur Smith, who is the Senate Finance Committee chairman, was more circumspect, saying the vetoed cuts could make it more difficult to craft a new budget in January.
“If the economy doesn’t perk up, and if by that time a second phase of the virus hits, she’s going to wish she cut more,” Smith said, referring to the governor.
Smith, who will no longer be a senator next year after losing his primary election in June, also suggested the spending the governor authorized through her vetoes wasn’t agreed upon by legislators.
“I’m just saying that if you’re going to do that, quite frankly, it should have been coordinated with an agreement before we went into special session,” said Smith, D-Deming.
The budget bill moved through the Legislature largely on party lines. The bill passed 46-24 in the House, with all Democrats voting for it and all Republicans voting against it. It passed 30-12 in the Senate, where a handful of Republicans voted for it but most opposing it.
Republicans largely criticized the bill during the session, arguing the state should cut more spending to lessen the budget difficulties legislators are likely to face in January.