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Martinez, lawmakers seem close on budget

Copyright © 2018 Albuquerque Journal

Rep. Patricia Lundstrom, D-Gallup, flanked by members of the Legislative Finance Committee that she chairs, present their budget proposal for the upcoming legislative session Friday during a news conference in Santa Fe. (Eddie Moore/Albuquerque Journal)

SANTA FE – When it comes to spending priorities, Gov. Susana Martinez and a key New Mexico legislative committee don’t appear to be far apart.

With a 30-day legislative session rapidly approaching, budget plans rolled out Friday by the state’s two-term GOP governor and the bipartisan Legislative Finance Committee both call for increased state spending on public schools, Medicaid and early childhood programs after several years of austerity forced by lower-than-expected revenue collections.

“It seems like we might be able to find more common ground than we’d expected,” House Speaker Brian Egolf, D-Santa Fe, said during a news conference at the Capitol Annex in Santa Fe.

In an odd twist, Martinez’s $6.3 billion budget plan would actually appropriate about $70 million more in the coming year than the legislative branch plan. The governor recommended $251 million in additional spending – a roughly 4 percent increase – while the LFC proposal calls for a $178 million spending increase.

The difference is due to the fact that Martinez’s spending plan hinges on additional dollars – about $99 million in all – being freed up by closing tax “loopholes” and other changes to the state tax code.

Top-ranking legislators clashed last year with the Governor’s Office over tax-related issues, but indicated Friday they’re open to the idea.

“It’s something that we’re willing to look at,” said Rep. Patricia Lundstrom, D-Gallup, the LFC’s chairwoman.

For her part, Martinez made it clear Friday that overhauling the tax code is an immediate priority and that she hopes to reach agreement with lawmakers.

Gov. Susana Martinez discusses her budget priorities Friday during a news conference in Albuquerque. (Eddie Moore/Albuquerque Journal)

“Every day matters to New Mexicans,” the governor said during an Albuquerque news conference. “Let’s get it done.”

However, House Minority Whip Rod Montoya, R-Farmington, said his caucus would oppose any tax increases – including making non-profit hospitals pay more – that are not part of a broader package of revisions to the state’s tax code.

In all, both budget plans would call for overall state spending to be increased for the first time in three years, as a recent increase in oil and natural gas production and improvement in other economic sectors have brightened the state’s revenue outlook.

“We need to do all we can to keep New Mexico moving forward,” Martinez said Friday.

Among other things, both Martinez and the LFC are calling for across-the-board salary increases for state workers and teachers.

The governor’s plan would provide a 1 percent pay raise for all state employees, while teachers and corrections officers, among others, would be in line for larger increases.

In turn, the Legislature’s proposal calls for salary hikes of 1.5 percent for both state workers and teachers, though some educators would see an even larger pay bump as starting teacher pay would rise to $36,000 per year. Other pay tiers for teachers would also be adjusted upward.

Areas of friction

While the two spending plans align on top priorities, it’s possible that politically charged budget disagreements will still arise during the upcoming session – Martinez’s last regular session as governor.

One area of friction could be public school funding.

While both the governor and the Legislative Finance Committee are proposing K-12 spending increases, more than $11 million of Martinez’s recommendation would be for merit-based teacher stipends and other discretionary programs that some Democratic lawmakers have opposed.

One teachers union, the Albuquerque Teachers Federation, quickly criticized the merit bonuses included in the governor’s plan, though a leader of a different union sounded a more conciliatory tone.

“After years of funding reductions, this movement forward, slight though it is, is definitely good news for New Mexico’s students,” said Betty Patterson, president of the National Education Association-New Mexico.

Meanwhile, though both spending blueprints would boost funding levels for prosecutors around the state, the governor’s plan also recommends an additional $5 million for the Bernalillo County District Attorney’s Office, which has struggled with heavy caseloads.

In contrast, the LFC’s plan would increase the funding for District Attorney Raúl Torrez’s office by only about $900,000 for the coming year, which would amount to a 5 percent increase.

“We need to be fair across the board for all our districts,” said Rep. Harry Garcia, D-Grants, in explaining the committee’s rationale.

Several other legislators said they would support funding separate crime-fighting pilot programs for Albuquerque, which posted its highest number of homicides last year in recent history.

Recent clashes

Striking a quick deal on state spending for the budget year that starts in July would be a rarity in New Mexico, as Martinez and the Democratic-controlled Legislature have clashed in recent years over tax increases and spending levels.

Last year, the Legislature was forced to return to the state Capitol for a special session after the governor used her line-item veto authority to strike down huge chunks of the budget, including all proposed funding for colleges and universities.

That money was eventually restored, but the dispute prompted heated finger-pointing and the filing of a lawsuit with the state Supreme Court.

This years’s 30-day session begins Jan. 16, and approving a balanced budget bill will be among lawmakers’ most pressing tasks. House and Senate budget committees are scheduled to begin work on budget-drafting next week, before the session officially begins.

Lawmakers will enter the upcoming session with an estimated $199 million in “new” money for the coming budget year – or dollars in excess of the state’s current $6.1 billion budget.

Both the budget plans would call for at least some of that money to be set aside in cash reserves, which were largely depleted last year.