A boom in the oil and gas industry helped deliver a record-breaking $8.5 billion budget to New Mexico this year. Despite the windfall, lawmakers declined to give needed funds to the agencies responsible for regulating the increased pollution that such booms create. The state’s two primary environmental agencies, the New Mexico Environment Department and the Energy, Minerals and Natural Resources Department, will both receive modest bumps to their budgets from the state’s general fund, but these will still fall about $9 million short of the amounts the agencies and the governor requested in the Executive Budget Recommendation. Both environment agencies are responsible for a growing amount of oversight, from enforcing pollution restrictions and food safety to mitigating wildfires and curbing impacts from climate change. Despite the increasing duties, the proposed spending plan for fiscal year 2023 calls for NMED’s budget to be nearly 5 percent lower when adjusted for inflation than it was in 2008; EMNRD’s budget is almost 13 percent lower.
As the clock on the legislative session continued winding down to the noon Thursday deadline, a battle over New Mexico’s proposed $8.48 billion budget blew up. The House of Representatives on Tuesday voted against a motion to concur with amendments adopted by the Senate. “I urge the body to vote no” on concurrence, said Rep. Patty Lundstrom, chairwoman of the House Appropriations and Finance Committee, before the House voted overwhelmingly against the Senate’s changes to House Bill 2. The spending plan, the highest on record, is poised to go to a conference committee made up of three members from each chamber with a goal of working out differences before the end of the session. It was unclear late Tuesday when the committee would meet.
The Senate Finance Committee put its stamp of approval Sunday on an amended $8.4 billion spending plan for the state of New Mexico that includes additional funding for criminal justice initiatives, road projects and a school of public health. The overall budget proposal, which the committee advanced to the full Senate in a unanimous vote, increases spending by nearly 14 percent, or roughly $1 billion, over the current fiscal year ending in June. The proposed level of spending represents an all-time high for the state.
“Everybody in New Mexico seems to have gotten something,” Sen. George Muñoz, D-Gallup, who chairs the committee, said Saturday after a series of amendments were presented to the committee. “We put a lot of money in economic development, and it had better be fruitful as we move forward or New Mexico is going to be looking at cuts again,” he said. “We ride the rollercoaster of oil and gas, and as long you want to continue that, we better plan carefully.”
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.
A record-high $8.47 billion budget that would boost state government spending in New Mexico by nearly 14 percent in the upcoming fiscal year passed the House on a 56-13 vote Thursday after a three-hour debate that largely focused on whether the unprecedented level of spending is sustainable. The proposed budget, which includes funding to give teachers, judges and other state workers raises, as well as what one lawmaker called “transformative investments” statewide, now heads to the Senate for consideration. Though the spending plan received bipartisan support, the 13 lawmakers who voted against the budget bill are all Republicans. Members of the GOP raised concerns about the spending increase of about $1 billion and introduced a substitute proposal that would have increased spending by about half of what’s proposed in the budget bill, or 7 percent. The Democrat-controlled chamber rejected the substitute.
Lawmakers have described the budget-making process in state government as a nightmare when times are lean. But with projections of record revenues, due in part to expected growth in taxes, rebounding oil and gas markets and federal pandemic relief, one legislator likened New Mexico’s proposed spending plan for fiscal year 2023 as a dream come true. On Tuesday, a key legislative panel put its stamp of approval on that plan — a record high $8.47 billion budget that would increase state spending by 13.8 percent, or roughly $1 billion, over the current fiscal year.
The House Appropriations and Finance Committee voted 15-3 to advance a substitute of House Bill 2, which includes average 7 percent salary increases for teachers and state employees and $25 million for evidence-based criminal justice reform initiatives, including stipends to hire new police officers. The proposal also leaves about $400 million for tax-related initiatives. “For the 10 years that I’ve been on this committee, my level of frustration goes up and down based on the amount of revenue … we have to distribute,” said Rep. Christine Trujillo, D-Albuquerque.
As New Mexico looks at an inevitable end to oil and gas extraction, some environmental advocates say no new leases should be issued and the United States should work to phase out fossil fuels. This would not have a huge immediate impact on the state, but could result in less revenue and fewer jobs in the future, experts say. President Joe Biden and Secretary of the Interior Deb Haaland, a former congresswoman from New Mexico, issued orders in January pausing both leasing and permitting to enable a robust review of the federal processes. The pause in permitting ended after 60 days, but the leasing pause continued until a federal judge issued a temporary injunction earlier this month. The vast majority of federal land available for leasing in New Mexico is already leased for oil and gas production, which limited the impact that the leasing moratorium had on the state.
“It’s not as if the bottom is going to fall out because of the moratorium,” Kayley Shoup of Citizens Caring for the Future said in a Zoom call hosted by the Sierra Club’s Rio Grande Chapter this week.
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.