2011 NM Legislative Preview: State Budget

Dec 16, 2010

Santa Fe, NM – When state lawmakers convene in January for a sixty-day legislative session, they'll have a lot on their minds. At the top of their worry list will be an estimated 400-million-dollar budget shortfall for the coming fiscal year. As KUNM's Jim Williams reports, legislators will once again have a tough battle over whether the state's two biggest programs, education and Medicaid, will be cut, and whether tax increases will be on the table.

Williams: Education and Medicaid account for 60 percent of the state budget. Cutting 400 million out of a 5-point-2 billion dollar budget isn't easy when 60 percent of said budget is off limits. Gubernatorial candidate Susana Martinez had made that promise earlier this year. In late October, when KUNM asked her specifically how she would cover the shortfall, much of her answer revolved around reducing state employees.

Martinez: If we did not fill positions of state employees once they left, for whatever reason, to stay home, for a different job, to go back to school five percent attrition rate, we could save as much as forty million dollars a year.

Williams: Martinez has been careful to avoid talking about cuts to education and Medicaid. But last week, NMPolitics dot Net reported that her transition team is now indicating education and Medicaid are on the table for cuts. They recently asked state agencies to identify ways to cut 10 percent from their budgets, and they're identifying "efficiencies" in the budget. Martinez has said she wants to avoid layoffs and furloughs, but hasn't ruled them out. And for education and Medicaid, many of the big decisions will be made in legislative committees. There've been some jokes floating around the Roundhouse about how the next Governor is really John Arthur Smith, a fiscally conservative Democrat who is the powerful chair of the Senate Finance Committee. Smith has said all along that Medicaid and education will have to share in the cuts along with other state programs.

Smith: So it's gonna be a tough challenge, but we need to be putting partisan politics aside and find out how we can deliver services in a less expensive way and still take care of the needs of the state of New Mexico. It's up to the administrators, and administrators make good money to be resourceful in how they're gonna deliver those services in a more efficient fashion.

Williams: Representative Donald Bratton, a Republican from Hobbs who is on the Legislative Finance Committee, or LFC, takes a sort of tough-love approach that may be prevalent in the coming session.

Bratton: We've made cuts in the last year and a half that have had some pretty huge impacts to particularly small agencies, so we've got to be very careful with regard to how we address that. But it's a long-term problem. It needs a long-term fix.

Williams: LFC chairman Lucky Varela, a Democratic representative from Santa Fe, says the cuts already made total 900 million dollars to recurring expenses some of that from education.

Varela: I'm concerned about cutting the budget any more. You know, we've done cuts to the extent that it's beginning to hurt a lot of, you know, the general public. So this is why we wanna find a better way of balancing the budget. Don't do it at the expense of cutting expenditures only.

Williams: More cuts will be a tough sell to many, including Democratic Senator Eric Griego, who is also director of New Mexico Voices for Children, an advocacy organization based in Albuquerque. He's likely to help lead an effort in the Senate to push back on raising revenues. He says start with the over 1 billion dollars in New Mexico's tax loopholes.

Griego: Right now we know where some of these big loopholes are. There's the mandatory-combined loophole that we could be asking multi-state companies to pay what in-state companies pay. That would generate 20 to 50 million. There's a number of loopholes for the coal industry, for the oil and gas industry, for a number of other industries that we could just make a decision in this session to close those loopholes and to say "you know what? Working families are paying their taxes, it's only fair that large corporations and coal companies and everybody else pay their taxes it's only fair that large corporations and coal companies and everybody else pay their taxes, so it's about fairness and it's about prioritizing children and families.

Williams: It's also about incoming Governor Susana Martinez, who might veto anything she sees as a tax increase. Griego says he thinks once she sees the impact of more deep cuts, she might reconsider. Earlier this month, the Human Services Department made a Medicaid presentation to the LFC. In it, Secretary Katie Falls made the point that Medicaid, a 4 billion dollar budget item including federal funds, essentially sustains thousands of jobs in New Mexico so cutting it would impact those jobs. In fact, the department says a 336 million dollar increase is needed simply to keep services at today's levels. The incoming Martinez administration has been meeting with Richardson administration officials about Medicaid, education and other budget issues. KUNM has asked for time with the Martinez transition team, but has had no luck thus far. One thing's clear: it'll be a tough legislative session coming up, and easy places to cut the budget will be hard to find. For KUNM, I'm Jim Williams.