State legislators finished the 2020 legislative session with a $7.6 billion budget in February that expanded spending 7.5 percent across the state’s departments, with more than 45 percent of all new recurring expenditures going toward what Gov. Michelle Lujan Grisham called the “education continuum,” from early childhood programs to higher education.
Then the pandemic hit in March, which brought the state’s economy to a grinding halt. And in April, a price war between Russia and Saudia Arabia drove the price of oil into negative territory for the first time ever.
In May, a group of state economists from the Consensus Revenue Estimating Group (CREG) warned that recurring revenues for Fiscal Year 2020 (FY20) could decline between $370 million to $480 million below forecasts from the previous year. That meant the state wouldn’t have enough money to cover FY20’s spending, the economists said.
The New Mexico Supreme Court ruled Tuesday in a 3-2 decision that the state Legislature can hold a special session without allowing in-person attendance from the public.
The decision was a result of a petition filed on behalf of a long list of state lawmakers by Albuquerque-based attorney Blair Dunn. The petitioners argued that this week’s special legislative session should be physically open to the public, not just online. With the backdrop of the current COVID-19 pandemic, legislative leadership announced earlier this month that the state capitol building would be closed to the public, with some exceptions for members of the press.
The high court issued a written order, but no written opinion. Chief Justice Judith Nakamura, the only Republican on the court sided with Justices Barbara Vigil and Michael Vigil. Justices Shannon Bacon and David Thomson dissented.
Gov. Michelle Lujan Grisham signaled in a letter to legislative leaders Thursday that there will be a special session to deal with the budget situation from plunging oil and gas prices and the economic impact of the COVID-19 pandemic. But first, Lujan Grisham said she wants new revenue projections, including a sense of what sort of federal aid will be provided to states as the country is gripped and increasingly shut down by the virus. House Republican leadership sent a letter to the governor on Thursday calling for a special session to adjust the budget. And Senate Finance Committee chairman John Arthur Smith told the Albuquerque Journal the state could be facing a billion dollar loss in revenue because of oil and gas prices. But Lujan Grisham said in a letter that her focus is currently on stemming the tide of the COVID-19 pandemic and that they need more time to fully assess the economic impacts.
Only two weeks after crafting and approving the state budget, the New Mexico Senate’s top finance chief has told Gov. Michelle Lujan Grisham he would have no problem if she decides to pare back spending. “I’ve already sent word to the executive branch that if they feel vetos are necessary, I’m not going to be objecting to those,” said Sen. John Arthur Smith, the influential chair of the Senate Finance Committee. “The last thing I want to do is go back into special session.”
Why such drastic talk only two weeks after the House and Senate agreed on a $7.6 billion budget for fiscal year 2021? To put it briefly, coronavirus. U.S. oil prices closed at their lowest point in almost four years Friday.
New Mexico’s 54th Legislature wrapped up Thursday amid congratulatory hugs and news conferences — a veneer of good cheer that masked a dose of sleep deprivation, early-morning procedural bickering, and finally, sighs of relief as key bills were passed just hours before the final gavel. Gov. Michelle Lujan Grisham and Democratic legislators touted the passage of a number of their priority proposals, including the creation of an early childhood trust fund, passing a high-profile firearms bill and shepherding through the state’s $7.6 billion budget for the 2021 fiscal year. “I think this was a really productive 30-day session,” Lujan Grisham said, surrounded by legislators and cabinet secretaries at a post-session news conference in the Roundhouse. “We are building something new together. We’re investing for tomorrow and we’re delivering today.”
The governor won passage for the majority of bills she asked legislators to undertake — 80 percent of them, by her own count.
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.
If you started the clock at midnight Monday and counted down to the end of this year’s legislative session at noon Thursday, you’d come up with 84 hours. That’s how long legislators in the state Senate have to make adjustments to the state budget. “Putting out fires. That’s what it looks like,” said Senate Finance Committee Chairman Sen. John Arthur Smith of what promises to be a frenetic three and a half days. Entering the final moments of the 30-day legislative session, the state budget encompassed in House Bill 2 remains in limbo.
If legislation had taglines, this one’s might be: “How a highly technical bill became the latest partisan punching bag.”
On Friday, the Democrat-controlled House Taxation and Revenue Committee approved House Bill 341, which proposes to transfer money from the state’s enormous Tax Stabilization Reserve fund into its operating reserve if the latter drops to less than 1 percent of total appropriations. The legislation’s proponents say the measure would fix a structural issue created when the rainy-day fund was set up, and would even help the state avoid calling a special session when it’s not necessary. But it became a flashpoint for discord Friday, with Republicans critics contending the bill is a cover for Democrats spending too much during the session. “If we refuse to address the technical problem that has arisen, we’re not doing our job,” House Speaker Brian Egolf said Friday at the committee hearing before voting in favor of the bill. At issue is the balance in the state’s operating reserve, a sort of holding account for the general fund that provides a buffer in case there’s a revenue shortfall.
The New Mexico House of Representatives may have passed the main budget bill, but the spending plan is unlikely to get to the governor’s desk without a slashing. The chairman of the Senate Finance Committee is more than irked at the version of the budget the other chamber sent over. Sen. John Arthur Smith is promising to “get real aggressive” in finding areas to cut and free up needed revenue. “I will admit that I’ve been more annoyed with this budget cycle and what was sent over to us,” said Smith, D-Deming, referring to House Bill 2. “Because of the reserve targets — they knew darn well what they were.”
When the House passed its $7.6 billion budget bill last week, it said the legislation called for stashing away 26 percent in reserves, which would be in line with Gov. Michelle Lujan Grisham’s spending plan at a time when the state is projecting sizable new revenues from oil and gas production.
With a week left to this year’s 30-day legislative session, House Republicans in a Thursday news conference again complained their Democratic counterparts are spending too much, claiming if a “messed up” budget proposal isn’t trimmed, the state may come up short by as much as $200 million.
Leaders on the Democratic side immediately countered, calling Republican claims “ridiculous,” “absurd” and “wrong.” Welcome to the Roundhouse, day 23. During a Thursday morning news conference, Rep. Jim Townsend, R-Artesia, and Rep. Rod Montoya, R-Farmington, pointed to a Legislative Finance Committee financial update this week that indicated projected revenues would fall short of the proposed expenditures by $200 million. “It’s just another example of the crazy spending going on in your Capitol,” Townsend said. Republicans have recommended a 4.3 percent increase to the 2021 fiscal year budget, far smaller than the 7.5 percent increase passed in the House more than a week ago.
The planned expenditures in the proposed budget, said Rep. Larry Scott, R-Hobbs, “are a concern.