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.
ByJens Gould and Michael Gerstein, Santa Fe New Mexican |
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.
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.
Proposed education budget cuts could worsen racial and economic inequities in the state, according to some school superintendents. Veronica Garcia, the superintendent of Santa Fe Public Schools, said that if the Legislative Finance Committee’s proposed budget cuts in education are passed, she expects to be looking at a $10.3 million hole in her district’s budget. She is starting with a $7 million deficit in her school budget and if the LFC’s proposed cuts go through, she expects to see another $3.3 million loss. Like the state, Garcia has to balance her budget annually. She says that situation will leave her with no choice but to make cuts that will enlarge classroom size, reduce programming and shrink ancillary roles such as social workers, librarians, nurse aides and nurses.
A cut here, a whack there — and a budget takes form. But not without some acrimony. The Senate Finance Committee released considerable changes to the state’s main budget bill Tuesday, trimming the House’s spending plan in high-visibility areas such as roads and teacher pay raises, and scaling down one of Gov. Michelle Lujan Grisham’s most prized pieces of legislation, the Opportunity Scholarship. The committee unanimously approved its amendments to House Bill 2, which calls for a $7.6 billion budget for the 2021 fiscal year, and moves the legislation to the Senate floor. That would represent a 7.6 percent increase over the current year and would target reserves at 25 percent.
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 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.
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.
The state House approved a $7.6 billion budget bill Wednesday, after Republicans criticized it and proposed an alternate plan during a floor debate. The House passed House Bill 2, the General Appropriations Act of 2020, by a vote of 46-24 along party lines after a three-hour debate. The spending plan represents a 7.5 percent increase from the current fiscal year, boosting spending in areas such as early childhood education. “Given all the important demands and the new demands, we made great progress,” House Speaker Brian Egolf said in an interview after the vote. “I think this is a budget that shows that we take very seriously the commitment to deliver on education, health care and public safety.”
As New Mexico lawmakers look for a way to provide extra funding for public school students in some of the most financially challenged areas of the state, a bill that eventually would provide $60 million a year for some of those districts to share cleared its first hurdle Wednesday. House Bill 4, sponsored by Democratic Reps. Brian Egolf of Santa Fe, Patricia Lundstrom of Gallup and Anthony Allison of Fruitland, would appropriate $18.9 million in fiscal year 2021 to start the new fund. Over the course of three years, the fund would grow to about $60 million in both operational funding and capital outay, Egolf said, adding 23 of New Mexico’s 89 school districts would be eligible for a share. The new funding is “a dire, dire need for us,” said Jvanna Hanks, assistant superintendent of Gallup-McKinley County Schools, a district that would qualify.