Copyright © 2020 Albuquerque Journal
SANTA FE – A package of budget and spending measures moving through the Legislature will need about $160 million in cuts to ensure New Mexico maintains its targeted level of financial reserves, the chairman of the Senate Finance Committee said Thursday.
Sen. John Arthur Smith, D-Deming, said he expects his chamber to make the adjustments as it revises the House-approved version of the budget and weighs other financial legislation in the coming days.
“It’s obvious that there was a real feeding frenzy with the extra money over there that hasn’t happened in recent years, until this year,” Smith told the Journal. “We’ll do the best we can.”
The two chambers must agree on an identical budget bill by next Thursday to send the proposal to Gov. Michelle Lujan Grisham.
Democrats hold majorities in the House and the Senate, although they sometimes clash over legislative and spending priorities. This year’s back-and-forth comes as New Mexico enjoys a revenue boom propelled by oil and gas production in the southeastern part of the state.
The budget bill adopted by the House this year – and now under consideration by the Senate Finance Committee – calls for about $7.6 billion in ongoing spending, an increase of roughly 7.5% over this year’s spending levels. The proposal, House Bill 2, would leave the state with reserves of 26%, one percentage point higher than the 25% target, according to nonpartisan legislative analysts.
Rep. Patricia Lundstrom, a Gallup Democrat and chairwoman of the House Appropriations and Finance Committee, said the spending bill was prudent and would allow the state to hit its reserve targets.
The bottom line, she said, is that the “New Mexico House of Representatives passed a responsible budget with a 26% reserve.”
But other pieces of legislation moving through the Legislature would also have budgetary impacts, such as potential changes to the tax code and stand-alone spending measures.
Consequently, Smith estimated Thursday that the Senate will need to trim about $160 million in proposed spending to put the state on track for the 25% reserves.
He said he expects to consider a variety of other changes to the House version of the main spending bill, too. They include the possibility of extra money for a new scholarship program backed by the governor, boosting the money for an early childhood trust fund from $300 million to $320 million and changes to the judiciary budget.
House Republicans, meanwhile, assailed the spending plan passed in their chamber and repeated their contention Thursday that Democratic lawmakers are overspending.
“There was absolutely no reason for us to get ourselves in this shape,” House Minority Leader James Townsend, R-Artesia, told reporters Thursday. “It’s just poor planning.”
Republican lawmakers said they will object to legislation proposed in the House that would make it easier to transfer money out of a tax-stabilization reserve fund. The proposal, House Bill 341, still must clear two committees to reach the full House for consideration.
Lundstrom, in turn, said the legislation would just allow money to move from one reserve fund to another when necessary.