SANTA FE – The New Mexico Supreme Court isn’t going to wade into the budget confrontation that has left public universities and the Legislature in financial limbo for the coming year – at least not for now.
And a political resolution doesn’t appear particularly close – as Republican Gov. Susana Martinez and Democratic leaders in the Legislature on Thursday traded jabs over who was most at fault for the budget impasse.
The back-and-forth came after the state Supreme Court, in a unanimous ruling Thursday, rejected the Legislature’s petition to invalidate the governor’s line-item vetoes of funding for higher education and legislative agencies.
The five justices said the dispute is not yet “ripe for review,” meaning it’s too early for a judicial decision.
That matches an argument by the governor’s legal team, headed by private attorney Paul Kennedy, who argued that the legislative and executive branches of government still have time to work out their budgetary differences through the normal legislative process.
Martinez, in fact, has called for a special legislative session to start May 24. The state’s budget year begins July 1.
Republican lawmakers said Thursday that they hope the court decision accelerates negotiations for a budget compromise of some kind.
“We still have time to put behind the political posturing and get down to negotiating,” Republican Sen. Mark Moores of Albuquerque said in an interview. “I think we’re in a position where we can all act like adults and come up with a good budget.”
Rep. Patricia Lundstrom, D-Gallup, chairwoman of the House Appropriations and Finance Committee, told the Journal that some top-ranking lawmakers have been studying budget-balancing scenarios in recent days, while expressing optimism that a deal can be struck before the special session.
Democrats and Republicans alike say they’d like to reach an agreement before the session starts, given the fact that special sessions can cost as much as $50,000 per day.
“If we don’t get together,” Lundstrom said, “I think it could be an awful waste of money for the taxpayers.”
The legal dispute centered on the governor’s decision to remove proposed funding – roughly $779 million in all – from a state budget bill for legislative branch agencies and colleges and universities. Martinez said the moves were only temporary and that those institutions can be funded in a budget compromise crafted in a special session.
Legislative leaders, in turn, argued the governor overstepped her authority by essentially abolishing public universities and the Legislature, an equal branch of government, through her line-item vetoes.
The Supreme Court, in Thursday’s order, didn’t weigh in on the merits. The justices simply indicated there’s no need to weigh in on the dispute at this point, and they canceled a hearing that had been set Monday in the case.
While the Supreme Court’s order essentially ends the court challenge, lawmakers could go back to the state’s highest court if the standoff continues through the special session.
In a statement Thursday, Martinez spokesman Michael Lonergan said the Supreme Court’s ruling paves the way for a potential budget compromise. But he also blasted Democratic legislative leaders for pursuing the case in the first place.
“This comes down to out-of-touch Santa Fe trial lawyers in legislative leadership who are suing the governor because they want to raise gas taxes, and she is the only one standing in their way,” Lonergan said. “Having been rebuffed by the court, the governor hopes Democratic legislators will now come to the table and actually negotiate in good faith.”
In a joint statement, House Speaker Brian Egolf, D-Santa Fe, and Senate President Pro Tem Mary Kay Papen, D-Las Cruces, said they “respectfully disagree” with the Supreme Court’s order.
“Despite the lack of a court decision, the fact remains that the governor’s vetoes were irresponsible and have created unprecedented instability in our economy and in our households,” the two top Democrats said.
Tax code overhaul
There’s been no movement toward a budget deal in recent weeks, and Martinez has slammed the Democratic-controlled Legislature for relying on tax increases to balance next year’s budget. In addition to her budget vetoes, the governor also axed a $350 million package of tax and fee increases aimed at helping to pay for state government operations in the coming year.
Top Democrats, in turn, have voiced resistance to some of the governor’s cost-saving proposals, including taking money from a legislative retirement account.
There has also been no agreement on a proposal to overhaul the state’s gross receipts tax system, which Martinez has proposed as a way to generate revenue in the short term and make New Mexico more friendly to businesses in the long run.
Lundstrom said top lawmakers and their staff have been studying the possibility of eliminating a tax deduction on nonprofit hospitals and collecting gross receipts tax on online sales – two ideas that might fit the governor’s willingness to close tax loopholes. The governor has suggested she’s open to generating some new revenue, if it’s done in connection with a broader effort to overhaul New Mexico’s tax code.
Lundstrom, for her part, said legislators would resist deeper cuts for colleges and universities – higher education has seen its state funding cut by 7.2 percent in the last two years – if no agreement can be reached on revenue-generating measures.
“I think we would look in other places,” Lundstrom said in an interview. “The last thing we need to do is cut them again.”
Rep. Sarah Maestas Barnes, R-Albuquerque, said she hopes both parties can work together and break the cycle of legislative approvals and executive vetoes.
“I hope that now with the court’s decision that everybody will be invited to the table and we can work out a compromise,” she said.