NM lawmakers embrace moves to close budget gap

Plan would restore $250 million to depleted state general fund accounts, elevating reserves to 3 percent of annual spending

Morgan Lee
Associated Press
New Mexico lawmakers are confronting budget shortfalls, frustration over a weak economy and concerns about violent crime and school performance during the legislative session.

SANTA FE — New Mexico lawmakers dove into efforts to close a lingering budget gap for the current budget year on the second day of the legislative session, lining up a package of solvency bills Wednesday for a full House and Senate vote.

Finance committees signed off on a plan to close an $80 million deficit for the fiscal year ending June 30. The bill would replenish the state's general fund reserves to $165 million, or nearly 3 percent of annual spending, by taking money from other parts of the budget.

"Right now we are dealing with a crisis situation. We're in the red right now," said Rep. Patricia Lundstrom, D-Gallup, chairwoman of the House Appropriations and Finance Committee, urging approval of the solvency bills. "We have a lot at stake here. Are we writing bad checks? Are we lowering our bonding capacity? That really hurts local governments."

Lawmakers were rushing to close a lingering financial shortfall so that they can map out spending for the coming fiscal year that begins July 1, when new cuts to agency spending are proposed. The budget crunch is closely linked to a downturn in the oil and natural gas sectors that has sapped tax revenues.

Broken into four categories, the solvency plan would reduce program spending at public school districts throughout the state by 2 percent, saving the state $50 million. School districts are expected to offset the one-time cuts using a portion of cash reserves, cumulatively estimated at $250 million.

A competing proposal by Republican Gov. Susana Martinez would have swept $120 million from school district reserves. The Legislature set aside the governor's proposals to reduce take-home pay to teachers and state workers by cutting government contributions to pension plans, though the plan could be revived in the coming budget year.

Teacher-union leaders expressed relief.

"The Legislature was in the position of choosing something really bad and something really horrible," said Charles Goodmacher, a spokesman for the National Education Association of New Mexico.

Other major solvency provisions would:

  • Shore up the general fund with as much as $88 million by spending insurance premium tax revenue as it is collected in the current year, rather than gathering funds to spend the following year.
  • Sweep as much as $98 million of cash balances from various state accounts into the state general fund, and make additional spending cuts to programs. Money would be taken from performance-based public school initiatives, a rural infrastructure revolving loan fund, and water and waste-water projects. Republican lawmakers are objecting to reductions to money for an economic development fund to attract new businesses to the state.
  • Cancel or postpone $8 million in spending on two local construction projects, freeing up money to funnel to the general fund.