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Spending plan moves $52M to fund operations

SANTA FE – A $6.3 billion spending plan for next year that’s being pieced together by a key House finance panel includes a small pot of money for pay raises but less state funding for New Mexico universities and behavioral health programs.

It relies on “sweeping” about $52 million from various state accounts in the coming year to help pay for day-to-day government operations, and it would divert about $18.5 million from a tobacco settlement fund to help pay for an uptick in Medicaid spending.

Plummeting oil and natural gas prices have blown a hole in budget recommendations released before the start of the ongoing 30-day legislative session, and the plan now being considered calls for state spending to increase by just $81.1 million – or about 1.3 percent – for the budget year that begins in July.

“This was a difficult process, given that $200 million basically disappeared in two weeks,” said Rep. Stephanie Garcia Richard, D-Los Alamos, during a Tuesday hearing.

The budget bill was not voted upon Tuesday by the House Appropriations and Finance Committee. That’s expected to happen Thursday, with the bill then moving on to the full House if approved.

The budget plan outlined in the House finance committee also hinges on projected revenue levels actually materializing.

State lawmakers would have to return to Santa Fe for a special session if projected revenue levels for the coming year ended up being more than 1 percent – or $63 million – lower than currently projected, said David Abbey, the director of the Legislative Finance Committee.

That’s because the bill would authorize only a maximum of $63 million to be transferred from the state’s cash reserves.

Nearly half of the $81.1 million in increased spending – about $38.5 million – would go toward Medicaid, the joint state-federal program that provides health care coverage to roughly 848,000 New Mexicans.

Rep. Larry Larrañaga, R-Albuquerque, the finance committee’s chairman, said the state has to pay for the rising cost of Medicaid, although he said the state Human Services Department has been asked to look at new cost-saving possibilities.

“The Medicaid piece is almost like an entitlement – we have to fund it,” Larra ñ aga told the Journal.

Under the House spending plan, most rank-and-file state employees and teachers would not receive a salary increase. Pay raises would be limited to two groups – $5.7 million for corrections officers in state-run prisons and $1.25 million for State Police officers.

Meanwhile, some lawmakers are still looking for ways to free up additional dollars, even though Gov. Susana Martinez has said she would any veto any tax increase proposed to her by the Legislature.

Rep. Luciano “Lucky” Varela, D-Santa Fe, said Tuesday that he’s considering introducing legislation today that could free up as much as $150 million by closing certain tax exemptions and deductions.

“We’re trying to find money anywhere we can,” Varela said. “It’s very hard to find money to fund adequately the vital programs we have.”