Friday, November 12, 2010
Richardson Drops Bomb
Copyright © 2010 Albuquerque Journal
By 2010 Dan Boyd
Journal Capitol Bureau
SANTA FE — New Mexico's budget crunch for the coming fiscal year could be $190 million worse than previously thought, and announcement of the bad news set off another fiery exchange between the outgoing administration of Gov. Bill Richardson and Gov.-elect Susana Martinez.
Richardson's finance secretary Dannette Burch said Thursday that Martinez and state lawmakers will face a $450 million revenue shortfall for the fiscal year, starting next July 1, just to maintain the state's current level of services.
That's a much higher number than the Legislative Finance Committee's earlier projected shortfall of $260 million.
There have already been spending cuts in Santa Fe and at colleges and public schools around the state because of recession-triggered state revenue declines.
After Burch disclosed the new shortfall estimate Thursday, Martinez accused the Richardson administration, which has less than two months left in office, of hiding budget information and playing "financial shell games."
"The revelation of a near half-billion dollar deficit is far worse than expected and confirms our suspicions that the Richardson/Denish administration has been hiding the ball all along with respect to the true budget deficit," Martinez said in a statement.
Lt. Gov. Diane Denish has served in that position eight years and was defeated by Martinez in the Nov. 2 election.
Richardson spokesman Gilbert Gallegos fired back, saying Martinez doesn't understand the state budget and the growth of the Medicaid health care program.
Gallegos also criticized Martinez campaign promises to reject tax increases and balance the state budget while also avoiding cuts to Medicaid and public schools — pledge that didn't differ from Denish's campaign rhetoric.
Medicaid and public education make up about 60 percent of the state's $5.6 billion budget.
"She can't keep her unrealistic promises and still balance the budget," Gallegos added.
The Richardson administration agreed in October with revenue estimates leading to the LFC's $260 million shortfall projection but did not at the time offer its own budget shortfall estimate for the coming fiscal year.
Martinez met privately with Richardson earlier this week, and both later described the meeting as cordial. But warring broke out the next day after the Martinez camp read in the Journal that the Richardson administration had been slipping political hires into protected positions in advance of leaving office.
Former U.S. Rep. Heather Wilson, R-N.M., head of Martinez's transition committee, warned that Martinez would fire anyone moved into a protected job without approval from the incoming administration.
The difference between the two budget shortfall estimates sparking the exchange Thursday stems in part from revenue assumptions in the LFC figure that would require approval of the Legislature and the Martinez administration in 2011 — such as requiring state workers to continue contributing more money to their retirement plans.
Meanwhile, the Richardson administration's much higher estimate includes higher cost projections for Medicaid due to projected enrollment growth and the rising cost of providing health care.
The LFC's figure doesn't factor such inflation-related costs into its projected revenue shortfall.
"I couldn't make any of those assumptions, because I don't work for the new administration," Burch said Thursday. "Obviously, things are going to be done (to address the budget gap)."
Burch said she wouldn't call the figures "competing," but said they reflect different budget perspectives.
The LFC chairman, Rep. Luciano "Lucky" Varela, D-Santa Fe, said the panel would examine the administration's numbers and try to reconcile them with the LFC's projections.
"We're building budgets already, so we need some kind of consensus of what the shortfall number will be," Varela said.
He said lawmakers have asked the administration about possible internal cost containment measures for the Medicaid program. The Legislature may need to look at additional cuts to education — for example, training days for teachers, he said.
Varela also said he doesn't think it's possible for Martinez to stick to her campaign promises not to cut education or Medicaid, or raise taxes, to deal with the budget shortfall.
"Where else is she going to cut?" he asked.
House Minority Whip Keith Gardner, R-Roswell, said many lawmakers have been expecting that the shortfall could reach $450 million to $500 million.
Even with that, "once the reality starts setting in, it's concerning," he said of the administration numbers.
"We've done our budgeting based on planning for the best and hoping for the best, instead of planning for the worst and hoping for the best," he said.
Much of the revenue shortfall projected for the coming fiscal year, which begins July 1, stems from the drying up of federal stimulus money.
Stimulus money accounts for about $400 million of the state's $5.6 billion for the current budget year. The state is not slated to receive any stimulus money next year, for the first time in three years.
However, the most recent estimate released by legislative branch and Richardson administration economists project that the state's incoming revenue levels will increase next year, at least somewhat offsetting the loss of stimulus dollars.
Gardner criticized Richardson for continuing to distribute discretionary federal stimulus money, rather than holding it back until the extent of the budget problems is clearer.
He likened it to "one last spending spree before we go bankrupt."
Journal staff writer Deborah Baker contributed to this report.