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Friday, September 26, 2008

State Surplus May Be Gone, Sen. Says

By Dan Boyd
Journal Capitol Bureau
          SANTA FE — The chairman of the state's Legislative Finance Committee is concerned that state government's budget surplus is vaporizing and wants state officials to consider tightening the purse strings.
        Sen. John Arthur Smith, D-Deming, a vocal skeptic of Gov. Bill Richardson's spending proposals during a special legislative session in August, said one option for the executive branch given the current economic landscape could be placing a freeze on nonessential travel, new hires and contract expansions.
        "If you can catch it early and hit the brakes, you can soften the blow," Smith said following an LFC meeting Wednesday.
        He said he's asked LFC Director David Abbey to meet with Department of Finance and Administration Secretary Katherine Miller to discuss the situation. In response to his request, one such meeting has been held and was described Thursday by Abbey as a "constructive conversation."
        Miller said in a statement Thursday that state officials should wait until a new revenue estimate is released in late October before thinking about making changes.
        "It is important to make decisions around consensus revenue projections and actual collections so that we avoid reacting to daily fluctuations," she said.
        In July, revenue estimates were projected to be about $400 million higher than predicted in the current fiscal year that began July 1. The surplus was primarily due to taxes and royalties derived from oil and natural gas production.
        But that number, calculated by administration and legislative economists, fell to $225 million in August after oil and gas prices tumbled and is expected to be even lower — or perhaps nonexistent — after the next round of estimates.
        "It's gone," Smith said of the surplus.
        But Miller said Thursday that the surplus sits at between $70 to $90 million.
        Richardson has described Smith and other senators as "pessimists" and recently asserted that the state's economy is in better shape than the economies of most other states.
        In a recent LFC newsletter, Smith urged cooperation and said more drastic responses to the economic cool-down could include small, across-the-board cuts for state agencies.
        Miller, however, said in her statement, "We see no reason to implement spending cuts at this time."