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Copyright © 2020 Albuquerque Journal
SANTA FE – Gov. Michelle Lujan Grisham signed into law a $7.6 billion spending plan Wednesday but axed nearly $110 million in projects from an accompanying public works package due to concerns over plummeting oil prices and the impact of coronavirus.
Among the roughly 530 projects vetoed by the Democratic governor were proposed school improvements, tribal building repairs, road renovations, street signs and nearly $4.8 million for fixing up a family services building in Bernalillo County’s South Valley.
“At this time of global economic uncertainty, it has become necessary and fiscally prudent to veto some projects that otherwise have merit, particularly those funded from general fund monies that would otherwise be available to bolster reserves,” Lujan Grisham said in an executive message to lawmakers.
The governor earlier this week vetoed a separate road improvement spending bill – that featured nearly $50 million in projects – and the combined general fund savings amount to roughly $150 million, according to the Governor’s Office.
That means more money will be available in cash reserves in case projected revenue levels do not materialize. As of last month, the state was estimated to have $1.7 billion in reserves when the budget year ends in June, but that figure could end up being much lower if oil prices do not rebound, and only a fraction of the money is accessible without legislative approval.
“I want to make sure we have hundreds of millions of dollars available to us if we need it,” Lujan Grisham told a news conference Wednesday at the state Capitol.
She also said she vetoed all capital outlay appropriations under $10,000, with the exception of some public school security projects, saying such small projects should be funded by local governments.
Sen. John Arthur Smith, D-Deming, said Wednesday that he was not surprised by the magnitude of the line-item vetoes, after urging the governor to trim non-recurring funding from spending bills during a meeting last week.
“I’m sure there’s going to be some crying and moaning,” said Smith, the influential chairman of the Senate Finance Committee. “In circumstances like these, we should not be parochial but should be looking out for the state.”
He also said the $150 million in vetoed general fund appropriations would likely give the state enough of a buffer to avert the possibility of the governor having to call a special legislative session on budgetary issues.
However, some Republican lawmakers accused Lujan Grisham of putting her pet initiatives above the state’s road infrastructure, even though the signed budget bill does include $180 million for statewide highway construction and repairs.
“Communities across the state who have dealt with crumbling infrastructure have lost out,” House Minority Whip Rod Montoya, R-Farmington, told a news conference Wednesday in Albuquerque.
The governor made far fewer line-item vetoes to the $7.6 billion budget plan than she did to the annual public works package.
Lujan Grisham left intact 4% pay raises for New Mexico teachers and state employees that will take effect in July. State Police officers, judges and corrections officers will be among those getting even larger salary bumps.
In addition, the governor left untouched a $320 million appropriation for a new early childhood endowment fund and a $55 million infusion to the Public Employees Retirement Association, one of New Mexico’s two large retirement systems that have been grappling with large unfunded liabilities.
In all, the budget plan calls for state spending to increase by more than $500 million – or about 7.5% – over current levels for the fiscal year that starts in July.
It’s the state’s second consecutive year of big spending growth after several years of budgetary belt-tightening, as surging oil production levels in southeast New Mexico have boosted state revenue collections to record levels.
But a global price war that erupted this week has threatened the state’s oil boom – and the revenue it generates – and prompted the governor’s decision to pare back non-recurring state spending.
On her final day to act on bills passed during this year’s 30-day legislative session, Lujan Grisham also vetoed a bill aimed at shoring up the state Retiree Health Care Fund by increasing mandatory employee contribution rates and taxpayer-funded contributions.
That legislation, House Bill 45, would have cost the state an estimated $9.6 million annually, and Lujan Grisham said in her veto message that it would have imposed an unfunded mandate on state agencies.
In all, Lujan Grisham vetoed just four of the 88 bills passed by lawmakers during the session that ended last month. Two of those vetoed bills were “pocket vetoes,” which occur when a bill is not acted upon before the signing deadline.
One of the measures that died due to pocket veto was a proposed tax break for residential facilities that house individuals with advanced dementia, while the other would have made changes to the Department of Military Affairs.
That veto rate is the lowest in recent New Mexico history, according to a Journal analysis.
Journal staff writer Scott Turner contributed to this report.