A $7.4 billion budget that would increase state government spending by 4.8 percent in the upcoming fiscal year cleared the New Mexico Senate along a mostly party-line vote Wednesday after an hourslong debate riddled with political potshots and last-minute amendments. “Not everybody’s going to like what’s in the budget,” said Sen. George Muñoz, a Gallup Democrat who is the Senate Finance Committee chairman. “Not everybody can get everything they want, but we can try.” The proposed budget calls for $3.35 billion in public education spending, a 5.8 percent increase; $300 million for road projects around the state; $200 million in pandemic recovery grants for businesses; and $34 million to help shore up the pension fund for the state’s educators. The proposal also includes about $64 million for a 1.5 percent cost-of-living adjustment for all state government, public school and higher education employees.
The prospect of additional state funds brought welcome news for New Mexico’s college students Wednesday. Based on an improved revenue outlook, New Mexico will have an additional $373 million to spend, bringing the state budget to $7.436 billion, financial experts said during a Senate Finance Committee hearing.
The extra money would include a one-time appropriation of over $20 million to make college more affordable for New Mexicans.
Some $11 million of the new money would go into the state’s Opportunity Scholarship Program, which gives residents the chance to attend college tuition-free. An additional $10.5 million would shore up the New Mexico Legislative Lottery Scholarship Program so that it would cover 90 percent of tuition for eligible students headed to college.
“Increasing lottery [scholarship] tuition really reduces the requirement for the opportunity scholarship [program] and expands its reach,” Legislative Finance Committee Director David Abbey told committee members.
“That’s a pretty significant supplement to financial aid, over $20 million.” A combination of recurring and one-time expenditures would also benefit the public school system, giving it over $3 million in extra funding. Another $1 million is aimed at supporting athletic programs at the University of New Mexico and New Mexico State University to help offset lost revenue because of the pandemic.
Another $34 million in state funding would be available to increase the employer contribution rate to the New Mexico Educational Retirement Board by 1 percent a year for the next four years.
The state House of Representatives approved what one lawmaker called a logical $7.39 billion spending plan for the upcoming fiscal year in a bipartisan 60-10 vote Wednesday. “This is a very important piece of work that the New Mexico Legislature is involved with,” Rep. Patty Lundstrom, who chairs the House Appropriations and Finance Committee, said after a nearly two and a half-hour discussion and debate on the proposed budget. “Certainly, under our New Mexico Constitution, it’s our No. 1 responsibility.” The proposed budget, which will be considered next by the Senate Finance Committee, represents a 4.6 percent increase in spending over the current fiscal year — a huge turnaround after initial revenue estimates had cast a dark cloud over state government last year amid the financial uncertainty stemming from the novel coronavirus pandemic. The spending plan calls for a 5.5 percent increase in public education, or a total appropriation of $3.39 billion.
New Mexicans should expect smoother roads and state government employees can look forward to a 1.5 percent cost-of-living adjustment in the upcoming fiscal year under a $7.39 billion spending plan the House Appropriations and Finance Committee unanimously approved Monday. The proposed budget, which represents a 4.6 percent increase over the current fiscal year, includes $300 million for state and local roads. The proposal also calls for $64 million in spending for a cost-of-living adjustment for all state government, public school and higher education employees. “This is the cleanest bill I’ve seen in the last 20 years,” said Rep. Patty Lundstrom, a Gallup Democrat who chairs the committee. “There’s no love handles on this bill.”
New Mexico’s financial outlook has improved yet again. While revenues are still expected to fall in the fiscal year that begins July 1, the drop won’t be as bad as predicted in December. General fund recurring revenue for the upcoming fiscal year is now estimated to decline by 8.5 percent, an improvement over the 10.9 percent drop forecast just two months ago, according to updated revenue projections presented Wednesday to the Senate Finance Committee. “The [fiscal year 2022] general fund recurring revenue is forecasted to grow by 4.9 percent compared to [fiscal year 2021], so the good news is … that there’s $339 million of new money,” Debbie Romero, acting secretary of the state Department of Finance and Administration, told the committee.
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 New Mexico Legislature finished its main task of mending the state’s huge fiscal shortfall Saturday, but the special session wasn’t over as the House of Representatives still had work to do.
The Senate approved 30-12 a modified budget planthat 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. “It’s certainly not the perfect response, but it darn well may be the only response we can give right now,” Sen. John Arthur Smith, chairman of the Senate Finance Committee, told his fellow legislators. After approving the budget, senators adjourned “sine die” and promptly left the Capitol, with several members eager to hit the road home. But the special session continued on. A long debate and dramatic revote on an election reform bill delayed the House’s proceedings, and representatives said they would need to return Monday to finish up.
Proposed cuts to higher education spending in New Mexico could jeopardize some research funding for state universities and lead to a hiring freeze at Santa Fe Community College, advocates say. Universities and colleges in New Mexico are denouncing proposed cuts to higher education spending as lawmakers trim budgets across state government to fill a $2.4 billion budget hole wrought by the COVID-19 pandemic and a devastated oil and gas market. A draft House bill seeking to blend recommendations from Gov. Michelle Lujan Grisham and an influential budget committee would slash roughly 6 percent from research and public service projects at universities and 4 percent for broader university and public college funding from the state. That would represent the steepest reductions for any state-funded department or agency eyeing potential cuts as lawmakers address the budget shortfall. The Legislature is still debating the proposed cuts.
State workers would see a drop in their pay raises for fiscal year 2021 and spending for most agencies would be cut significantly under the draft budget overhaul lawmakers began debating Wednesday. Whittling a record $7.6 billion budget to $7.34 billion — and filling wide spending gaps with cash reserves, pandemic-related aid from the federal government and other measures — is no small task for the New Mexico Legislature as it convenes Thursday for a special session to address a steep decline in projected revenues. Members of the state House and Senate finance committees met Wednesday to review the plan, which would slash higher education spending by 6 percent — the biggest cut for any single agency — and reduce the 4 percent pay raises for state workers, approved earlier this year, to 1.5 percent for those who earn less than $40,000 a year and 0.5 percent for higher earners. Funding for the new Early Childhood Education and Care Department, set to take over all services for young children July 1, would be cut by $3.3 million; the spaceport would lose $600,000; and $17 million would be slashed from the Medicaid program. Lawmakers, however, hope to shift money from the Tobacco Settlement Permanent Fund to fill the Medicaid gap.
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.”