ALBUQUERQUE, N.M. — Gov. Susana Martinez rolled out a $6.3 billion spending plan Monday, saying spending for New Mexico public schools and job-creation programs must be bolstered despite an uncertain state revenue picture.
With dropping oil prices threatening to further undercut the projected amount of state money available next year, Martinez’s budget recommendation would increase spending levels by $141 million – or 2.3 percent – over this year’s levels.
If her plan were to be enacted, that would be the smallest annual budget growth since Martinez first took office in 2011.
“Financially, we are on solid ground,” the Republican governor told a news conference Monday at a Las Cruces-area elementary school. “It just means we need to be cautious, monitor these (energy) prices regularly, and prioritize more and better.”
By overall dollar amount, the governor’s budget plan is similar to a legislative spending proposal unveiled last week.
The two proposals will serve as starting points for the Legislature during the 60-day legislative session that begins next Tuesday.
Neither plan includes broad-based salary increases for rank-and-file state employees, most of whom received a 3 percent pay hike this year, although some teachers and State Police officers would get raises.
“The good thing is we’re all working with the same numbers to begin with,” said Rep. Larry Larrañaga, an Albuquerque Republican who has been touted as the likely chairman of the House Appropriations and Finance Committee after a historic GOP takeover of the chamber in the November elections.
However, Martinez’s spending recommendation calls for more state general fund money to be spent on Medicaid and less on the judiciary and the state’s cash-strapped Law Offices of the Public Defender, among other differences.
In addition, the governor called for a $21.7 million increase in education spending for administration initiatives, including a teacher stipend program, out of roughly $68 million in total new K-12 dollars.
The Legislative Finance Committee budget plan, in contrast, includes a $10.5 million increase for initiatives by the administration’s Public Education Department as part of $71 million in education spending growth.
Sen. Carlos Cisneros, D-Questa, said there are ideological differences between the governor’s administration and many Democratic lawmakers on some education funding issues, specifically the idea of merit-based pay for teachers.
But Cisneros said Monday that he did not think such disagreements would derail the budget process, as nearly happened during last year’s legislative session.
“We’ll try to balance it out as best we can,” said Cisneros, vice chairman of the Senate Finance Committee. “I don’t think it’s going to be as egregious as it was a year ago.”
Although Martinez touted the state’s fiscal stability in her Monday remarks, the volatility of energy prices could cause the spending plans to have to be scaled back.
The ongoing drop in oil prices already has caused a sizable decrease in the amount of “new” money projected for lawmakers in the coming year – from $285 million in August down to roughly $141 million as of last month.
Taxes and royalties on the energy industry make up nearly 20 percent of the revenue that flows directly into the state’s general fund.
State and legislative economics will release revised revenue estimates in the next month or so, but some lawmakers are already bracing for the worst.
“We could be not at $140 million (in new money), but more like $40 million by the time we finalize the budget,” Cisneros told the Journal.
Martinez declined to say Monday what spending areas might be on the chopping block should oil prices continue to fall, but listed what her priorities would be.
“As it adjusts, we’re going to adjust,” she said. “But I’m going to tell you, our priorities are our kids, growing our economy – so the revenues go up in different areas – and making sure our kids are safe.”
She also said health care would be among her priorities.
The governor also proposed a one-time expenditure of $1.8 million for the Spaceport Authority to address a budget shortfall caused by launch delays at Spaceport America, near Truth or Consequences.
“This is the first year that any kind of funds from the state have actually been proposed to spend on spaceport,” Martinez said. “It has experienced difficulty in the revenue that was expected by now. But we are optimistic, and that is why we’re investing.”
An explosion during a test flight in October in California destroyed Virgin Galatic’s SpaceShipTwo, killing one pilot and severely injuring another. The disaster further delayed the spaceline’s plans to begin commercial service from New Mexico. Virgin Galactic is the sole tenant at the Spaceport America terminal.
Other highlights of Martinez’s budget proposal include:
• An additional $8.2 million to hire more caseworkers and expand the use of child advocacy centers under the Children, Youth and Families Department.
• Appropriating $6.5 million for the state legislative lottery scholarship program to ensure that students that qualify for awards receive at least 95 percent of their tuition costs for the next three semesters – starting this spring.
• Setting aside $25 million for a state closing fund to be spent on business expansion and relocation expenses. That money would be in addition to $25 million more for the economic development grant program that would come from state capital outlay dollars.
Dan Boyd reported from Santa Fe; Lauren Villagran reported from Las Cruces.
Gov. Susana Martinez’s budget proposal would appropriate $6.3 billion for the fiscal year that starts in July. Here’s how the governor’s budget compares with the Legislative Finance Committee spending plan in some key areas:
- Public schools – Martinez plan, $68 million increase (2.5 percent); LFC plan, $71 million increase (2.6 percent)
- Higher education – Martinez plan, $8 million increase (1 percent); LFC plan, $18.9 million increase (2.2 percent)
- Prisons – Martinez plan, $10.5 million increase (3.8 percent); LFC plan, $12.2 million increase (4.4 percent)
- Court system – Martinez plan, no increase; LFC plan, $7 million increase (3.2 percent)