There’s nothing like a crisis to focus your priorities.
In the case of ever-expanding coronavirus concerns – as well as an oil price war between Russia and Saudi Arabia – Gov. Michelle Lujan Grisham has the state of New Mexico staying the course on a $536 million spending increase that heavily favors recurring costs and projects that won’t last the life of the loans taken out to pay for them. Her $7.6 billion spending plan is predicated on an average oil price of $50 per barrel.
Last week, March Madness was canceled, Disneyland was closed, the Archdiocese of Santa Fe put Mass on hold and oil was trading at $31 a barrel.
Just a $1 change in the average annual New Mexico price of oil has around a $22 million effect on the state general fund, according to the Legislative Finance Committee. Consider the fiscal year we are in as well as the one that begins July 1, and multiply that $22 million by 20-plus and we hate to say “We told you so” about how a boom always eventually turns bust, but. …
Why veto one-time projects that last?
Days before signing off on the state budget and line-iteming out (some very veto-deserving) capital outlay projects, the governor rejected around $50 million for more than 200 road projects statewide in Senate Bill 232.
And sure, it’s hard to make an unassailable argument for things like median landscaping when the money spigot is drying up, or much-needed law enforcement vehicles that are driven hard and do not last a decade. But things like repairing, maintaining and expanding major arterials like Eubank, Academy, Juan Tabo and Paseo del Norte in Albuquerque? Lights for Los Altos Park, which Albuquerque is trying to reclaim from crime? Building a relief route for oilfield traffic around Carlsbad? A replacement bridge in Roswell? Heavy road equipment for Ramah, Lake Valley and Catron and Colfax counties? Preventative highway maintenance that saves money on major reconstruction in the long run in Curry County? Remember that almost every road construction project brings in a large federal match, leveraging state taxpayer dollars like few other investments.
After the veto, House Minority Whip Rod Montoya, R-Farmington, said “communities across the state who have dealt with crumbling infrastructure have lost out.”
The rejected 37-page list covers our large state and is primarily focused on what government is supposed to be about – safety and spending money on preventative maintenance now rather than total rebuilds later.
And everything on it was cut.
And keep projects that don’t?
Instead, too many questionable projects survived the governor’s veto pen. Yes, she took a smart stand and vetoed almost all capital outlay appropriations under $10,000, saying such small projects are the responsibility of local governments. And she did reject nearly $110 million worth of items that while likely were much wanted by somebody, made no sense financing with severance tax bonds over 10 years – including some that are really local or foundation fund-raiser responsibilities – things like a frisbee golf course in Taos and a Steinway piano for the N.M. Philharmonic.
But many items survived Lujan Grisham’s veto pen that should not have, including myriad $5,000-or-so investments in school security upgrades. While we all want our schools to be secure, this is not the way to pay for it. (Again, staff will spend hours checking if the work will last the 10 years of the bonds that finance it, there’s no way to combine small projects to get bang for financing buck, there’s a separate program to fund school security projects, and any appropriations for schools in the capital bill have to offset funding from the Public School Capital Outlay Fund program.)
In addition, taxpayers will be financing things like $48,000 for instruments and costumes for the Las Vegas school district’s Mariachi Cardenal, $295,964 for a youth playscape and exhibitions at the Albuquerque International Balloon Museum, $385,000 for pickleball complex improvements in the metro area, $300,000 for police motorcycles in Albuquerque and Bernalillo County, and $100,000 for diaper changing stations in public restrooms around Santa Fe.
While boosting spending nine figures?
The bottom line is state spending is up 20% over the last two years, while prices at the pump are now under $2. That math doesn’t work, especially considering taxes and royalties on oil and natural gas account for roughly 36% of the state’s total revenue, according to the Legislative Finance Committee. (And the percentage is much higher when you factor in what flows into the state’s permanent funds and a tax reserve fund.)
Sen. George Muñoz, D-Gallup, has said of the low oil prices, “if those numbers hold through June, it’s unstable.”
And while Lujan Grisham spokeswoman Nora Meyers Sackett promised the governor’s vetoes would “counteract the potential” of a revenue downturn and keep cash reserves at robust levels, the combined general fund savings amount to roughly $150 million while spending is up more than $500M.
As for the estimated $1.7 billion in reserves when the budget year ends in June, tanking oil prices would diminish that – and only a fraction of the money is accessible without legislative approval in an emergency. (Remember 2016-’17’s tough cuts, controversial revenue sweeps and scaled-back spending plans?)
The fact remains New Mexico is spending hundreds of millions of extra dollars – and is now committed to continue spending hundreds of millions of dollars extra every year.
The $320 million to set up a permanent fund for early childhood education and $17 million for free college are important game-changers that invest in New Mexico’s future. But when added to recurring state employee raises (4% for teachers and state employees; State Police officers, judges and corrections officers will join others in getting even larger bumps), $55 million to the perennial shoring up of unsustainable state pensions, and millions for things like diaper-changing stations that are not state government’s responsibility and cop cars that won’t be on the road in 10 years, it’s clear New Mexico needs to go to Shopaholics Anonymous.
House Minority Leader James Townsend, R-Artesia, said this month the oil price drop “is just another example of why we needed to be more prudent with our expenditures.”
We hate to say we told you so, but. …
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.