SANTA FE — With New Mexico facing an increasingly gloomy budget situation, Gov. Michelle Lujan Grisham said Tuesday that she supports taking more money from the state’s largest permanent fund to give the state some short-term revenue relief.
The governor has said she expects to call lawmakers back to the Roundhouse for a special session in mid-June to address a drop in revenue that at least one prominent lawmaker has estimated could be as much $2 billion for the coming budget year.
That decline is due to a double whammy of plummeting oil prices and a larger economic downturn caused by the coronavirus pandemic.
Given that backdrop, Lujan Grisham said she would support tapping more heavily — for the next year or two — into the Land Grant Permanent Fund, which is already set to distribute roughly $836 million in the coming budget year for New Mexico public schools and other beneficiaries.
Although she said she hadn’t made a specific request to lawmakers, she said some legislators are already discussing the possibility.
“I think it’s an idea that has merit,” the governor said, “and I expect it to be on the table for the special session.”
However, at least one high-ranking lawmaker quickly criticized the proposal.
House GOP floor leader James Townsend of Artesia accused the governor of preferring to steal from New Mexico children than reduce state spending levels.
“People across the state are having to tighten their belts,” Townsend said in a statement. “The governor’s answer to this problem is to spend more. Her refusal to accept the magnitude of the state’s fiscal and economic crisis is disturbing.”
The Land Grant Permanent Fund is the nation’s third-largest sovereign wealth fund — behind only the funds run by Texas and Alaska — and was valued at $17.9 billion, as of the end of March.
Past attempts to increase the fund’s annual 5% distribution rate — based on a rolling, five-year average of the fund’s total value — for early childhood programs have been stymied in the Senate, where critics say it would diminish the permanent fund for future generations.
Lawmakers did vote this year to establish a $320 million early childhood trust fund, though that money could be diverted to address the state’s burgeoning budget crunch.
Meanwhile, even if a short-term increase in the Land Grant Permanent Fund’s distribution rate is approved by a majority of lawmakers in both the House and Senate during a special session, it would still have to win the approval of voters statewide.
The earliest such a proposed constitutional amendment could go on the ballot would likely be in November, when New Mexico holds its general election.
Journal staff writer Dan McKay contributed to this report.