The world bears little resemblance to the one we were living in just weeks ago when the New Mexico Legislature passed a $7.6 billion budget, and Gov. Michelle Lujan Grisham signed it into law, for the fiscal year starting July 1.
It is a budget loaded up with hefty raises for teachers and state employees, millions of dollars allocated to shore up public employee pensions and initiatives near and dear to the governor like “free college” and $320 million in startup funding for a new early childhood trust fund. But that was pre-coronavirus and stay-home orders closing “nonessential businesses,” when a lot more people still had jobs and spent money at restaurants, brew pubs, movie theaters and retail stores – with gross receipts dollars rolling into state and local government coffers.
It was before COVID-19 jumped out of China and became a world pandemic that has brought the global economy to its knees and helped crater the price of oil. New Mexico had been riding a revenue wave from oil and gas production, and each $1 drop in the price per barrel is a hit of about $22 million to the state general fund. The FY21 budget was based on $50 a barrel. This week it is trading in the low $20s.
While no one could have seen the economic calamity now unfolding, it should be noted minority Republicans and some financially astute Democrats complained – or at least cautioned – about profligate spending and “moonshots.”
Finger-pointing and recrimination are the stock-in-trade of politics, but that’s not what people want right now, and it is counterproductive. What we need is for lawmakers and the governor to pass a new budget for FY21 based on the new reality of oil prices, a certain hit to both gross receipts and income taxes, swelling unemployment rolls and businesses staggering under loss of revenue (while grocery stores are doing a booming business, food is exempt from GRT).
“We’re not looking at ‘if’ there will be a special session but when,” says Sen. John Arthur Smith, D-Deming and chairman of the Senate Finance Committee. “We’re still trying to figure out where things are going because we’re still on a downward trajectory.”
One impediment is the virus itself. Under the governor’s public health orders, gatherings of more than five people generally are prohibited. And even if that doesn’t apply to the Legislature, it’s a health risk to pack lawmakers (many in high-risk categories) into the Roundhouse. Various possibilities include convening a session with a bare majority who could practice social distancing, a format that would include all lawmakers but allow extra time for voting so there are only a few on the floor at a time, or conducting a “virtual” session as suggested by Speaker Brian Egolf, D-Santa Fe.
House Minority Leader Rod Montoya, R-Farmington, has questioned whether that would be constitutional, a legitimate question given a provision that calls for the Legislature to hold its session at the seat of government. Legislative Council Service director Raul Burciaga says “logistically, it’s feasible,” he said. “Constitutionally – that’s a question above my pay grade.” But it’s not above the pay grade of Attorney General Hector Balderas, who should weigh in ASAP.
The are a couple of bright spots. First, the oil boom has allowed the state to put aside $1.7 billion in reserves. The state is also supposed to get an estimated $1.25 billion in budget deficit backfill from the stimulus bill that cleared the Senate Wednesday night. So we do have some emergency cash and a little breathing room. But a final fiscal day of reckoning is coming soon. Lawmakers and the governor need to make plans for it.
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.