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Saturday, October 10, 2009
N.M. Deficit Soars
By Dan Boyd
Copyright © 2009 Albuquerque Journal
Journal Capitol Bureau
SANTA FE — Top-ranking New Mexico legislators said Friday they now expect to deal with a deficit exceeding $650 million when they convene for a special budget-balancing session next week.
The size and scope of the state's revenue and budget problems have continued to grow as the Oct. 17 session called by Gov. Bill Richardson nears. The shortfall of revenues compared with spending in the current budget year was previously estimated to be about $430 million.
Three legislative budget-balancing proposals delivered to Richardson's office for advance consideration Friday are each aimed at reaching $650 million in savings.
The proposals indicated that even deeper budget cutting, and possibly decreases in the salaries of state employees, including teachers, will be considered in the special session, according to legislators involved in pre-session budget talks.
While a formal revenue forecast isn't expected to be released until next week, some lawmakers say there's no use denying that the ongoing erosion of the state's revenue base has grown more severe than previously thought.
"I think that realization is going to happen," said Sen. John Sapien, D-Corrales, one of the legislators who's been involved with budget negotiations with Richardson's office during the last month.
Revenues from oil and gas production began dropping many months ago, and drops in state revenue from income and gross receipts, or sales, taxes have begun deepening as the national recession has kept the country in its grip.
The three legislative proposals for balancing the state's roughly $5.5 billion state budget include:
• An across-the-board 3.5 percent cut to state agencies, including K-12 education spending, in addition to a 2.5 percent salary cut for state employees that would go into effect Oct. 31.
• An across-the-board 4.7 cut to state agencies and public education with no decrease in salaries.
• A 16.3 percent cut to state agencies excluding K-12 public schools and higher education, which would both be held harmless.
Richardson has clashed with top-ranking lawmakers on whether education should be included in special session spending cuts, and his office issued a statement Friday saying he hasn't wavered from his anti-education cuts position.
"Governor Richardson continues to stand with New Mexico's teachers and kids to resist harmful cuts to classroom spending," Richardson spokesman Gilbert Gallegos said. "The governor has provided guidance to lawmakers and, ultimately, the entire Legislature must work together to reach a consensus and deliver a fiscally responsible budget."
House Speaker Ben Lujan, D-Santa Fe, said a consensus hasn't been reached yet, but said the increasing size of the revenue shortfall makes leaving education untouched an unlikely proposition.
"I think that, realistically, we can't really say that at this point in time," Lujan said.
While some lawmakers have advocated for tax increases to be considered during the special session, Richardson and legislative leaders have agreed to limit the scope of the session by ruling out such measures.
Unless that changes, a coalition of unions, social advocacy groups and religious organizations arguing for tax increases and against spending cuts could wind up without key supporters during the special session.
"If they're not on the call, they won't be germane to the session," said Rep. Luciano "Lucky" Varela, D-Santa Fe, chairman of the Legislative Finance Committee.
Most Republicans appear to agree with the Legislature's Democratic leadership that cuts in education spending also have to be on the table.
"The realists in the education community understand there is room (for cuts) there without affecting classrooms," said House Minority Whip Keith Gardner, R-Roswell.
Gardner also said there's been no evidence to suggest state revenue levels won't continue to drop.
Richardson has said he hopes to reach agreement with legislators on a budget-balancing plan before the start of the special session, but admitted to reporters earlier this week that there's a chance no such agreement will be in place.
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