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.
Later this month, New Mexico lawmakers will have another chance to fix an economic problem that has plagued the state for decades. “For at least 40 years people in the state government and the Legislature have known that they are overly dependent on oil and gas for state revenue,” says Jim Peach, regents professor of economics at New Mexico State University. Right now, more than 40 percent of the state’s income relies on the boom-and-bust fortunes of oil and gas. Now, according to a trio of New Mexico’s leading economists, the time has come to change course. This story was first published at Capital and Main and is republished here with permission.
The oil boom continues to roll, and thanks in large part to the funds, the latest projection finds New Mexico will have nearly over $900 million in “new money” next year. That’s what the Legislative Finance Committee was told at a hearing Wednesday. The latest projections show that, buoyed by the oil and gas revenue, the state could see $907 million in excess of what it spent in this year’s budget, the second straight year with massive budget surpluses.
The increased revenues gives legislators more money to budget for increased spending in areas like education, healthcare and infrastructure and to add to reserves to guard against future economic slowdowns. Slowdowns could come because of the boom and bust nature of the oil and gas industry, which is over 40 percent of the state’s revenue. And there are some fears that the ongoing trade war with China and other international economic activities could lead to a global recession.
This week, Intel announced it would hire 300 more employees. Those new hires would bring the number of employees at its massive Rio Rancho plant to around 1,500, well below the peak of nearly 7,000 employees, decades ago. Economic Development Department Secretary Alicia J. Keyes called it “good news” as the state tries to diversify its economy. Diversifying the economy has been a rallying cry for years, as the state has increasingly been reliant on oil and gas money to balance the state budget. If the most recent Legislative Finance Committee hearing last week is any indication, those efforts are still a work in progress.
The New Mexico Senate and House of Representatives appeared to have an agreement on a $7 billion state budget late Friday after ironing out differences over pay for educators, funding for roads and college athletics. In the end, the biggest sticking point turned out to be a tiny but politically fraught piece of the spending plan: $700,000 for legislators to hire additional staff. The House passed the budget Feb. 21 and the Senate approved a series of changes on Wednesday. But the House did not accept those changes, spurring a round of negotiations between members of the budget committees in both chambers in an effort to reach consensus before the legislative session ends at noon Saturday.
A Senate committee rolled back proposed tax increases in a sprawling bill that would change rates on internet sales, car purchases, e-cigarettes and more. House Bill 6 represented a push by top Democrats in the House of Representatives to shore up the state’s finances, which now rest largely on revenue from oil and gas. But it prompted plenty of skepticism for threatening to raise taxes for many New Mexicans at a time when the state enjoys a hefty budget surplus from an energy boom. The big question now is when the bill will get a hearing in its next and last committee as the Legislature hurtles toward a noon Saturday adjournment. If the Senate Finance Committee doesn’t act on the measure until Friday, House Democrats may be left with little time to negotiate and have to choose between either accepting the Senate’s changes or nothing.