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Wednesday, January 28, 2009
Lawmakers Moving Measures To Plug Budget Gap
By Barry Massey
The Associated Press
SANTA FE — Lawmakers are moving ahead with a package of measures to help plug a $450 million gap in the state's budget.
The Senate Finance Committee approved proposals Tuesday to provide extra money for the state in the current budget year by speeding up corporate income tax payments and tapping into the state's reserves as well as cash balances held by certain agencies and programs.
Another bill is pending in the House that would cut spending on general government operations and public schools. The reductions would range from a little over 1 percent to as much as 5 percent for certain agencies in the current fiscal year, which started in July.
State government cannot run a budget deficit. But based on current economic projections, revenues are expected to fall $450 million short of covering spending in the current budget, which was approved by the 2008 Legislature.
The state's revenue outlook has deteriorated as oil and natural gas prices plummeted during the past six months and as the nation's economy has soured.
“This is a legitimate emergency in the state of New Mexico,” said Sen. John Arthur Smith, a Deming Democrat and chairman of the Senate Finance Committee.
Approved and sent to the Senate for debate were proposals to:
â– Change the schedule for estimated corporate income tax payments. In 2003, a requirement for one quarterly payment was inadvertently dropped. The legislation would restore that provision, shifting some money to the 2009 budget year that otherwise would be paid in 2010. It does not increase a company's tax liability. The change will provide $32 million to the state this year.
â– Transfer almost $56 million from a state reserve fund and use that to cover personal income tax rebates that were approved during a special legislative session last year. In addition, the bill would shift money from cash balances of certain agencies and programs and move it to the state's main budget account.
The transfer legislation also contains provisions to offset some spending cuts for public education and Medicaid. Lawmakers propose to cut general tax dollars going to those programs and replace part of it with other revenues.
Medicaid, for example, would lose almost $33 million this year in general tax dollars, but the program would get about nearly $25 million in tobacco settlement revenues. The revenue swap results in a 1 percent net reduction for Medicaid.
There's a similar proposal for public schools, using almost $36 million from a reserve account known as the education lockbox to partly offset cuts of general tax dollars. The result: a net 1 percent cut in public schools.
Lawmakers continue to negotiate with Gov. Bill Richardson's administration on another part of the budget solvency package: chopping capital improvement projects to free up one-time money.
The corporation income tax payment bill is SB80; the fund transfer measure is SB79 and the spending cut measure is HB10.
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