Buckle up! It’s going to be a rough ride for public agencies and their employees this year.
While prices at the gas pump hovering around $2 a gallon are a nice holiday treat, the damage plunging oil prices are doing to New Mexico’s coffers isn’t cause for celebration.
Although state budget experts earlier this year had predicted New Mexico would be enjoying $285 million in new money for the 2015-16 fiscal year budget, they now forecast the amount will be less than half of that. The latest estimate is about $141 million and could fall below $100 million.
New Mexico depends heavily upon oil and gas taxes and royalties for its spending money. Such revenues account for about 19 percent of the state’s annual general fund budget, which last year was about $6.2 billion.
Since the price of crude oil hit a high of $107 in June, its price has been falling – and with it the projection for new state revenues. State budget experts estimate that every $1 drop in annual average crude oil prices costs the state budget $7.5 million in potential revenue. The current price is below $60 a barrel.
That gloomy picture means most state employees likely won’t see raises next year. The Governor’s Office still intends to propose that the Legislature approve raises for child protective service workers and State Police officers because they are difficult to recruit and retain.
The governor would also like $50 million to use in attempts to bring new business to New Mexico.
Education initiatives could take up about $70 million, according to state Senate Finance Committee Chairman John Arthur Smith, a Democrat from Deming.
The Human Services Department is asking for nearly $25 million to cover the cost of new enrollees in Medicaid – not because of Medicaid expansion, but largely because of thousands who had been eligible but never signed up until now. And the new Public Defender Department produced a report that says it needs about $50 million more than it received last year just to function.
On top of that, University of New Mexico President Robert Frank told university regents a week ago that the hit from oil and gas likely will nearly double the university’s expected deficit for FY 2015-16 to $4.7 million.
Meanwhile, retirees who worked for UNM want the university to continue subsidizing their health care insurance, and a UNM committee set up to study this and other health care questions recommends that it do just that. How that would be paid for and who will pick up the increased costs becomes a bigger problem as new resources become less secure. But regents should fight the temptation to place the burden on students through higher tuition, current employees through higher premiums, or taxpayers. So, regents have their work cut out for them if they want to continue the university’s largesse – at a time when the Affordable Care Act provides a vehicle for those retirees to bridge to Medicare.
Let’s see – so far, we’re way, way beyond the now optimistic $141 million figure.
And don’t forget the above list doesn’t include money for other programs dealing with poverty, children, mental health and a host of other needs for which advocates and lobbyists will seek funding.
It’s clear that our citizen legislators will have their work cut out for them when they convene in January. They will have to carefully prioritize needs and figure out how to make do with a whole lot less than expected.
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.