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Governor proposes 4% rise in spending, ambitious agenda

Copyright © 2018 Albuquerque Journal

Gov. Susana Martinez, entering her final regular legislative session in office, will propose an increase in state spending on public schools, Medicaid and New Mexico’s judicial system in a budget plan to be released today.

In all, the two-term Republican governor’s budget proposal would boost state spending by roughly $250 million – or 4 percent – over current levels and would provide a 1 percent across-the-board pay raise for state workers. Teachers and corrections officers, among others, could see larger salary increases.

The governor’s plan would provide the largest spending infusion into state government in years. After two consecutive years of painful budget cuts, New Mexico’s revenue picture has brightened in recent months, driven by increased oil and natural gas drilling and economic growth in other areas.

“A big piece of our focus has been diversifying the economy and making sure our state finances are healthy,” Martinez told the Journal during a Thursday interview.

However, some lawmakers have questioned Martinez’s claim that the improving revenue outlook is due to a broad economic turnaround.

“It’s not really diversity; it’s the resurgence of oil and gas,” said Sen. John Arthur Smith, D-Deming, the chairman of the Senate Finance Committee.

He also called a pay raise for state workers “needed,” citing chronically high vacancy rates among state corrections officers and in other agencies

At least some of the money for funding increases – an estimated $99 million – would come from eliminating various tax deductions, including making nonprofit hospitals pay the same tax rate as other hospitals.

While Martinez has adhered to a “no tax increase” stance since taking office in 2011, her administration has indicated it’s open to raising revenue by closing “loopholes” in an attempt to level the state’s playing field for businesses.

However, it’s unclear exactly which provisions might end up in a tax code overhaul for the upcoming 30-day legislative session, or if such a package could gain approval in the Democratic-controlled Legislature.

Lawmakers paid an outside firm $400,000 last year to study the state’s tax system and build a computer model aimed at helping analyze potential changes to the tax code. But some top Democrats have said it makes sense to wait until 2019, when a new governor will be in office, before making sweeping changes to the tax code.

Popular ideas

Some of Martinez’s budget recommendations could find bipartisan support.

Such a list could include an additional $5 million for the cash-strapped Bernalillo County district attorney’s office, and more funding for public defenders and judicial offices to help retain employees.

“Since I’ve taken office, I’ve made public safety a priority, and I’m not going to stop,” Martinez said Thursday.

There also appears to be agreement between the Martinez administration and the Legislature on state worker pay raises, since a key legislative committee will recommend 1.5 percent pay raises for teachers and state employees for the budget year starting in July 2018, its chairwoman said last month,

The state’s roughly 17,000 rank-and-file state employees have not received pay raises since 2014 – although targeted salary increases have been approved more recently for State Police officers and corrections officers – as lawmakers have enacted spending cuts, drawn down the state’s cash reserves and used other cost-saving measures in response to several years of lower-than-expected revenue collections.

The average annual salary for a rank-and-file state employee was $45,324 as of this year, according to a recent State Personnel Office report. Nearly half of the workers make less than $40,000 per year.

Under Martinez’s plan, most state workers would receive a 1 percent pay hike, while teachers would see their salaries increased by 2 percent.

In addition, the governor will call for a new pay stipend for teachers who receive “exemplary” grades on their annual evaluations. Those stipends would amount to $5,000 per year for most of those teachers, and $10,000 for exemplary teachers in certain math and science fields.

Money in reserves

The governor’s spending plan – along with the Legislature’s – will serve as budget blueprints of sorts for the upcoming session, which starts Jan. 16.

While Martinez’s proposal would spend most available “new” money in the coming budget year, it would set some aside as a buffer. Specifically, the governor’s budget plan would leave the state with about 10 percent, or more than $600 million, in cash reserves, she said.

Some additional details of the governor’s budget plan:

n An increase of $38 million in state spending on Medicaid, the joint federal-state health care program that currently covers more than 800,000 New Mexico adults and children.

n An appropriation of $12 million for a job-training incentive program, and making the program a recurring budget line item.

n A boost of $3.5 million in spending on the “New Mexico True” tourism campaign, which would be used to launch a marketing initiative in the San Francisco area.

n Earmarking an additional $25 million for child care assistance programs.

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