E-mail Story
Print Friendly
Send E-mail
Reprint story
Saturday, August 15, 2009
Budget Shortfall $433 Million
By Dan Boyd
Journal Capitol Bureau
ANGEL FIRE — New Mexico faces an estimated revenue shortfall of $433 million for its current budget year, a sign the economic downturn is more severe and enduring than previously thought.
The budget numbers presented to legislators Friday will probably force lawmakers to cut spending — which could affect schools, health care and more — or come up with more revenue by either tapping into existing state funds or raising taxes.
With revenue down by more than $700 million over the past two years, the state's cash reserves of about $570 million won't be able to plug the budget gap.
"We have a major task before the Legislature and the executive before January of next year," said Rep. Luciano "Lucky" Varela, D-Santa Fe, chairman of the Legislative Finance Committee.
Driven by sharp declines in the amount of income and sales taxes flowing into state coffers, New Mexico economists expect revenue for current budget year to drop to less than $5.1 billion, a sharp decrease from the $5.5 billion predicted a few months ago.
The state's job market is at its weakest level in more than 50 years, according to figures cited in the new revenue estimate. Economists predict state revenue levels will begin rebounding by 2010, but say they could take several years to stabilize.
"The recovery period will be very slow," Finance and Administration Secretary Katherine Miller said after Friday's meeting. "New Mexico tends to leg behind the rest of the country in its downturns as well as its upturns."
Gov. Bill Richardson said earlier this week that he intends to call a special budget-balancing legislative session this fall, probably in October.
Teacher unions and public employees unions have already said the state should consider repealing past tax cuts or imposing new tax requirements on out-of-state corporations to help plug the budget gap. They've said they'll fight any salary cuts to teachers or other rank-and-file government workers.
In addition to the $433 million shortfall for the budget year that began July 1, lawmakers must also approve spending more than $300 million in funds held over from last year's budget to close the books on the recently completed fiscal year.
Richardson said this week he thinks the revenue shortfalls can be plugged without raising taxes, laying off government workers or reducing basic services.
"As the economy goes down, the need for increased government services goes up," Miller said. "The state still has a lot of money in different funds that can be put to work."
However, some legislators said Richardson could do more to cut back on state government travel and basic spending among executive branch agencies. Government spending increased by about 50 percent during the first six years of the Richardson administration, before the ongoing economic downturn forced lawmakers to pare back last year's budget.
"I do believe the executive branch has executive authority that has yet to be exercised," said Sen. John Arthur Smith, D-Deming, the LFC's vice chairman.
The size of the revenue shortfall, while not totally unexpected, didn't sit well with legislators like Smith, who said, "We should be in the emergency room right now."
Federal stimulus dollars have helped keep the state's revenue shortfall from growing even larger than it is, but legislators are wary of relying on a one-time infusion of federal help to fix the state's cash woes.
And while oil and natural gas prices — which drove the state's budget problems earlier this year — have rebounded and appear to be holding steady, Rep. Donald Bratton, R-Hobbs, said decreasing volumes of oil and gas extracted in New Mexico could pose serious fiscal consequences in years to come.
New Mexico isn't the only state dealing with budget problems.
Even with the updated revenue forecast, New Mexico ranks 30th among states in terms of the size of its budget gap relative to the overall budget, according to the Center for Budget and Policy Priorities.
State Revenue Picture
Revenue estimates released Friday by a group of executive branch and legislative branch economists show revenues for New Mexico's current budget year have plunged from the previous forecast. A sampling:
Personal income tax — Down $202.6 million
Corporate income tax — Down $73 million
Excise (sales) taxes — Down $24 million
Total revenue shortfall — $433 million
You also can send comments via our comment form
|
|
