Senate approves bill easing access to rainy day funds

A bill that would make it easier for the Legislature to tap into rainy day funds cleared the Senate on Thursday over the objections of Republicans who accused Democrats of being fiscally irresponsible. Senate Bill 135, which passed 24-15 after an hourlong debate, changes transfers between the more restrictive Tax Stabilization Reserve and the less restrictive operating reserve. Under current law, when operating reserves exceed 8 percent of the prior year’s appropriations, the excess is transferred to the Tax Stabilization Reserve, said Sen. Siah Correa Hemphill, D-Silver City, who sponsored the measure. The bill would “keep that provision in place but it provides for the transfer to occur only if the balance of the Tax Stabilization Reserve is less than 20 percent of appropriations,” she said. “When the balance … exceeds 20 percent, no transfer will occur and the funds will stay in the less restrictive operating reserve.”

Correa Hemphill said the existing relationship between the two rainy day funds limits the Legislature’s ability to have the “flexibility” to deal with important needs when they arise.

New numbers from the state on revenue, reserves

Earlier today, we reported about New Mexico’s dipping reserves. In Fiscal Year 2016, the reserve fund was at $146 million, and in Fiscal Year 2017, New Mexico was $67 million in the red. Now, the Legislative Finance Committee has released its revenue forecast for the state. Among the report’s highlights:

Preliminary FY 2017 ending reserve balances are $329 million. Projected FY 2018 ending reserve balances are $206 million.

New Mexico’s reserves among lowest in the nation

New Mexico’s savings keeps dropping —and now the state has one of the smallest cushions of any state in the nation. Even now, those reserves are still well below pre-recession levels. If no new money were coming in and the state government could rely only on those reserves, there would only be enough cash to run the state for 8.4 days. That’s according to The Pew Charitable Trusts and its analysis of states’ fiscal health. In Fiscal Year 2016, the amount of money New Mexico held back and put into savings—to pay for unexpected expenses or shore up the budget when revenues dip—was at its lowest level since 2000, according to Pew.