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Legislative panel offers its own $7 billion budget plan

Copyright © 2019 Albuquerque Journal

SANTA FE – A key New Mexico legislative budget panel unveiled a $7 billion spending plan for next fiscal year that would use tax dollars from a spike in oil production to increase teacher salaries, send more money to classrooms with high numbers of at-risk students and add at least 10 days to the state’s current school year in response to a landmark court ruling on education funding.

In all, the Legislative Finance Committee budget plan released Monday would increase year-over-year state spending by $670.8 million – or 10.6 percent – and would earmark more than three-fifths of the additional spending for public schools statewide.

“Learning activities for students are going to increase considerably” under the proposed spending infusion, Sen. Mimi Stewart, D-Albuquerque, chairwoman of the Legislative Education Study Committee, told a news conference at the state Capitol on the eve of a 60-day session, which starts at noon today.

However, although the budget proposal is similar in many ways to a separate plan rolled out last week by Gov. Michelle Lujan Grisham, it also contains several important differences.

Notably, the legislative budget blueprint would not appropriate an estimated $300 million to pay off a backlog in state film rebates, an action that Lujan Grisham has proposed, along with eliminating an annual cap on film subsidy spending, to invigorate the state’s film industry.

A legislative economist said the state would be spending roughly $200,000 per film industry job if the annual cap were eliminated.

In addition, the new Democratic governor, who was sworn into office Jan. 1, has proposed earmarking $75 million for a state “closing fund” that’s intended to spur economic development by luring out-of-state companies to New Mexico. The legislative budget plan includes only about $4 million for the program.

Lujan Grisham, speaking to reporters gathered for her first Cabinet meeting, said it’s natural for the executive and legislative branches to see things a bit differently at the outset of budget talks. In some areas, she said, the two proposals this year share broad priorities but differ on the details.

“Our budget should be different than the LFC budget,” Lujan Grisham said. “It’s a different perspective. There are places where I think we are aligned, while the numbers are a bit different.”

She and Olivia Padilla-Jackson, the governor’s pick to head the state Department of Finance and Administration, said the administration’s proposal would maintain higher reserve levels, would be “more aggressive” on education and would address serious understaffing in some state departments. But they said they don’t believe they’re too far apart from the proposal by legislators.

“We are completely open to working with every member of the Legislature,” Lujan Grisham said. “We are ready and willing to negotiate.”

Rep.-elect Andrea Romero, D-Santa Fe, left, helps analyst Wendy Pomeray find her office at the Roundhouse on Monday. The 60-day legislative session starts today. (Eddie Moore/Albuquerque Journal)

Meanwhile, Sen. John Arthur Smith, D-Deming, chairman of the Senate Finance Committee, urged caution despite the unprecedented state revenue growth, saying 45 cents out of every state dollar spent is now attributable to the state’s energy industry.

“We have an awful lot of eggs in one basket,” Smith said. “This state is so heavily reliant on oil and gas.”

Some Republican lawmakers agreed with those comments, calling the proposed spending increases in both the Legislature and governor’s budget plans too aggressive in light of the historic volatility of oil and gas prices.

“The honest truth is both of these budgets are way overspending,” Rep. Jason Harper, R-Rio Rancho, told reporters. “We’re just setting ourselves up to cut education again.”

School funding

Public school spending already makes up 44 percent of the state budget, and that figure would go up under both budget recommendations.

The LFC budget plan would increase public school spending by $416.6 million – or 14.9 percent – and would use some of that money to raise minimum starting teacher pay to $40,000 a year – up from $36,000 – and give all educators a 5.5 percent salary increase. School principals would get an even larger pay hike.

In addition, the state’s funding formula for public schools would be adjusted so more money would flow to districts with large populations of Native American, disabled and low-income students, along with English-language learners.

Also, an existing K-3 Plus program that provides summer school for roughly 300 low-income or low-performing schools statewide would be expanded to include fourth- and fifth-grade students.

Top-ranking legislators expressed confidence Monday that the education package, which will be introduced as stand-alone legislation, would sufficiently address a July 2018 ruling by a state judge that New Mexico was failing to meet its constitutional requirement to provide a sufficient education to all students.

Rep.-elect Anthony Allison, D-Fruitland, looks at art as he wanders the Roundhouse on Monday. He said he was learning his way around the building before today’s start of the 60-day legislative session. (Eddie Moore/Albuquerque Journal)

Retired District Judge Sarah Singleton gave lawmakers and the governor an April deadline to come up with a plan to comply with her ruling.

“I think this budget … has addressed exactly what the judge asked us to do,” said Senate President Pro Tem Mary Kay Papen, a Las Cruces Democrat.

Some groups involved in the court case have called for a funding increase in the $1 billion range, but House Speaker Brian Egolf, D-Santa Fe, said that would not be a responsible approach.

“There is simply no way for $1 billion to be absorbed by the state’s 89 school districts” in a year, Egolf said.

Raise for state workers

After nearly a decade of little or no salary growth, other state workers would pocket larger paychecks under the legislative budget plan rolled out Monday.

Rank-and-file state employees would get a 4 percent salary bump, and judges would receive a 6 percent salary increase.

In addition, the plan calls for $27.2 million to be spent during the coming budget year to increase how much money the state pays into the retirement accounts of teachers and state workers.

Both of the state’s two large public retirement systems have seen their unfunded liabilities increase in recent years, and a June 2018 downgrade of the state’s credit rating was due largely to concern over the pension funds’ financial situation.

Meanwhile, the LFC budget plan also calls for about $400 million to be spent on state and local road projects, and additional one-time spending on other infrastructure projects. That money would come from surplus state dollars, not from issuing new state bonds.

Even with the ramped-up spending, nearly $1.5 billion would be set aside in cash reserves in case projected state revenue levels do not materialize.

The governor’s budget plan and the Legislature’s recommendation will serve as blueprints of sorts as lawmakers get to work coming up with a final budget for the fiscal year that starts in July.

Journal Capitol Bureau reporter Dan McKay contributed to this report.

 


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