Following hours of debate in both chambers, the New Mexico Legislature has approved a framework balancing the state budget for the coming fiscal year, though nearly all legislators representing Chaves County voted against it.
House Bill 1 (HB 1) passed the New Mexico House of Representatives Friday evening 46-24 with Democrats, who hold the majority in the chamber, all voting for it. All House Republicans voted against it, including representatives Phelps Anderson, Candy Ezzell and Greg Nibert of Roswell, and House Minority Leader James Townsend of Artesia.
The Senate voted 30-12 for passage Saturday. Four Republicans, including state Sen. Gay Kernan of Hobbs, joined all 26 Democrats to pass the bill. Senators William Burt of Alamogordo, Cliff Pirtle of Roswell and Senate Minority Leader Stuart Ingle of Portales voted against.
Passage of a fix to balance the $7.6 billion state budget approved in February was the main reason for the special session, as the state copes with a 25% downturn in revenue for fiscal year 2021, which starts July 1.
State Rep. Patricia Lundstrom, D-Gallup, chair of the House Appropriations and Finance Committee, when addressing House members on the floor Friday, said that the coronavirus global pandemic and the downturn in oil prices created “a perfect storm” that led to a massive drop in state revenues for the coming fiscal year that could not have been predicted.
“We feel that this is a responsible approach to the budget,” Lundstrom said of HB 1 while speaking on the House floor. “We have not lost sight of the fact that the budget is all about the people of New Mexico.”
HB 1 achieves a balanced budget through nearly $600 million in cuts, as well as clawing back money for some infrastructure and capital outlay projects throughout the state, $780 million in funds from state reserves and $750 million in federal coronavirus aid the state has received, according to Lundstrom. Reserves under the budget fix would be lowered from 25% to 12%.
Most state agencies, with the exception of the departments of Health and Public Education, face 4% cuts across the board, and school employees will get a 1% average salary raise compared to 4% as stated in the budget signed into law in February.
Kernan, a member of the Senate Finance Committee, said advocating for larger spending reductions would have created a tougher situation for school districts as well as government agencies and departments throughout the state.
“The solvency plan isn’t perfect but as a participant in reaching consensus among my fellow senators, I support the work that has been done,” she said in a written statement Monday.
Burt, who also sits on the Finance Committee, disagreed and said a better approach would have been to address the state’s budget shortfall through more spending cuts rather then one-time federal money and tapping state reserves.
“In my opinion if you’re a billion dollars short you cut a billion dollars out of the budget,” Burt said.
Diminished reserves and effects of economic disruption likely will become evident with new data when the New Mexico Legislature reconvenes in January for their regular session.
“So we kind of put a bandaid on a bleeding artery here and that is the way I kind of look at this,” Burt said.
The state was able to avoid some of the larger cuts through $750 million in funding New Mexico received through the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, passed this past spring.
Burt and other critics of HB 1 though said it is not clear that money can be used to cover some of the items in the budget, though he added other states have used those funds in a similar manner and have not received a negative reaction from the federal government from doing so.
Lundstrom said Friday that New Mexico’s congressional delegation and other states have pushed for greater flexibility in the use of CARES Act funds.
If it is found CARES Act funding cannot be used, more money would have to be used from reserves.
Many Republicans though said hope for more flexibility to spend CARES money is not good enough.
“I understand the optimism of relaxation from the feds, but we can’t take that to the bank,” Anderson said on the House floor.
He added that if such authority is not granted by the federal government, the Legislature will have to dig deeper into the reserves, leaving little left to be used to craft the Fiscal Year 2022 budget come January.
A number of Republicans said while HB 1 does balance the budget in the short term, come January — as the state is still likely to face a tough budget situation — options might be more limited, including tax increases.
“We may be able to fix this right now but come the session in 2021, we are going to be telling every taxpayer in our state ‘Folks, you need to empty your pockets and send your money to Santa Fe because we are in a real tight budget crunch right now,’” Ezzell said.
Breaking news reporter Alex Ross can be reached at 575-622-7710, ext, 301, or email@example.com.