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Calm urged over falling oil, gas revenues

SANTA FE – Gov. Susana Martinez’s administration urged calm Thursday after hearing lawmakers from both political parties express alarm at plummeting state revenue levels.

A spokeswoman for the Martinez administration’s budget agency expressed optimism that free-falling oil and gas prices, and related drilling activity, have bottomed out, saying, “much of that pain is in the rearview mirror.”

“We are very aware of the challenges presented by falling oil and gas prices,” added Department of Finance and Administration spokesman Julia Ruetten in an email to the Journal. “However, it is important not to overstate the problem.”

The drastic drop in oil and natural gas prices has stoked fears in recent days that New Mexico could face a budget shortfall of as much as $800 million for the current fiscal year, which ends June 30.

Were that to materialize, the state’s cash reserves alone would not be sufficient to bridge the gap, which would likely mean steep spending cuts or a need to raise revenue.

Senate Finance Committee Chairman John Arthur Smith, D-Deming, who called Wednesday for Martinez to enact a state employee hiring freeze and a ban on nonessential travel, met Thursday with the Republican governor for more than an hour.

He later told reporters the meeting was productive, saying, “We have a huge, serious problem and I think they’re starting to understand that.”

Some Democratic lawmakers have blamed Martinez, the state’s two-term Republican governor, for not taking swift action in response to the state’s budget situation.

Sen. Linda Lopez, D-Albuquerque, said Thursday that the governor should come forward with revenue-raising proposals. Several tax measures filed by Democrats during this year’s 30-day session have not advanced.

But DFA spokeswoman Ruetten said the Martinez administration is sticking to a “no tax increase” stance the governor has held since taking office in 2011.

“It is not appropriate to consider raising taxes as these would hit hardworking New Mexicans and small businesses at the worst time,” Ruetten said.

Meanwhile, Ruetten also said the Martinez administration is taking steps to limit nonessential spending, including cutting back on state employee travel across all agencies.

While much of the Roundhouse focus has been on the current budget year, a $6.3 billion spending plan for next year – fiscal year 2017 – that was approved Saturday by the House will likely have to be pared back by about $100 million, Smith said.