By Daniel Chacon, The Santa Fe New Mexican
From a numbers standpoint, separate spending plans put forth by the executive and legislative branches of state government for the upcoming fiscal year aren’t that far off.
Gov. Michelle Lujan Grisham is proposing a record high $10.5 billion budget while lawmakers are recommending a slightly slimmer $10.1 billion spending plan amid a revenue bonanza fueled in large part by the oil and gas industry.
Directionally, both budget recommendations are similar as they focus on health care, housing and how to improve schools through literacy initiatives and extended learning time.
But the devil is in the details.
“There in fact is a great deal of common purpose, a common focus, and also there are some important differences,” Rep. Nathan Small, D-Las Cruces, said Monday, the eve of the 30-day legislative session, which is focused primarily on passing a state budget.
The Legislature, which convenes Tuesday at noon, is also poised to consider hundreds of pieces of legislation, including a slew of contentious gun violence prevention measures.
Small, who serves as chairman of the House Appropriations and Finance Committee and vice chairman of the interim Legislative Finance Committee, said one of the biggest differences between the lawmakers’ spending plan and the governor’s is the proposed creation of a $300 million government accountability trust fund.
As explained by lawmakers, the fund would essentially be used to finance pilot projects to ensure they deliver results before the Legislature commits to making them part of the state’s recurring funding.
Small called the proposed fund a new and innovative idea.
“We are really focused on effective implementation, on making sure that money is budgeted in the ways where it can best help New Mexicans make the most impact,” he said.
Wayne Propst, secretary of the New Mexico Department of Finance and Administration, said the executive branch at this point has more questions than answers about the proposed fund.
“It is a significant change to the way the state does its budget, the most significant change I’ve seen in my 19 years or so in state government,” he said.
Propst questioned whether a short session was the right time to consider such a big change and noted there were no hearings on the proposal “during the interim to kind of flesh out how exactly it would work.”
Lawmakers meet for 60 days in odd-numbered years and 30 days in even-numbered years, which some say limits how much they can get done.
Charles Sallee, director of the Legislative Finance Committee, said the $300 million would be “for four years’ worth of spending for a variety of different projects.”
Sallee noted some agencies requested big increases in their budgets.
Once a new initiative is added to an agency’s base budget, he said, “one of the concerns is that if it’s not effective or not effectively implemented, getting that back out is very difficult.”
The new fund would allow the committee to avoid saying no to a new request outright and instead say, ” ‘Maybe, but you’re going to have to prove it because we’re going to give you four years’ worth of funding. Go show that this is worthwhile to build into the agency’s base budget,’ ” Sallee said.
Other key distinctions between the two spending plans:
- The governor is proposing a $500 million tax package, while lawmakers are proposing $200 million in tax cuts.
- The governor’s spending plan calls for 3% across-the-board pay increases and 14% hikes for New Mexico State Police officers, which some lawmakers worry will drive up vacancy rates at smaller law enforcement agencies. The LFC is proposing 2% across-the-board pay increases and then providing agencies an additional 2% for positions that are hard to fill or for retention.
- Medicaid provider reimbursement rates would be higher under the governor’s proposed budget than the LFC’s.
- Lawmakers would receive less funding for capital outlay in their districts under the governor’s spending plan, a proposal already creating strife. While the governor’s proposal calls for each chamber of the Legislature and the executive branch to split $350 million three ways and $500 million for statewide capital outlay, the LFC proposal calls for a three-way split of $525 million.
“We certainly have some things that we would like to have funded that they don’t,” Propst said. “In particular, we have a very large housing package, which is $500 million of nonrecurring funding.”
In her executive budget recommendation, Lujan Grisham called the proposed housing package “the most robust investment in housing in state history.”
The funding would be split evenly between the New Mexico Mortgage Finance Authority’s Housing Trust Fund and the New Mexico Finance Authority’s Opportunity Enterprise Fund to provide direct assistance for renters, homeowners and people experiencing homelessness, as well as a loan program that provides financing for building and renovation projects.
Sen. George Muñoz, a Gallup Democrat who chairs the LFC and the Senate Finance Committee, said the recurring spending in the governor’s budget would require painful budget cuts in the future.
Maddy Hayden, a spokeswoman for Lujan Grisham, said the Governor’s Office disagrees with the contention.
“There is no evidence that budget cuts will be required,” she wrote in an email.
“In fact, the LFC’s own analysis projects steady revenue growth for the foreseeable future, albeit at lower levels than the past few years,” she wrote. “The LFC’s recurring, non-recurring capital outlay and proposed tax package are all within the range of the Executive’s budget. … Plus, the Executive Budget maintains higher reserves at 34.2%.”
Lawmakers and Propst said they expect the two branches of government to reach a compromise.
“Whether you’re talking about capital outlay, whether you’re talking about a tax package, whether you’re talking about recurring or nonrecurring spending, the overall differences in terms of dollar amounts are not that different, and I think there’s some commonality in priorities as well,” Propst said.
“I think we’ll get there.”