SANTA FE – Funding for New Mexico public schools, Medicaid and a number of cash-strapped agencies would go up in the coming year under a $5.7 billion budget proposal unveiled Wednesday by the Legislative Finance Committee.
In addition, state workers would see larger paychecks: they would receive a one-half percent pay raise – about $200 more per year for a worker earning an annual salary of $40,000 – and the amount they pay into their state retirement plans would drop.
Rank-and-file state employees have not received pay raises since 2008.
“We’d like to be able to communicate to the public that things are getting a little bit better,” said Sen. John Arthur Smith, D-Deming, the LFC’s chairman.
However, a spokesman for Gov. Susana Martinez said Wednesday that the first-term Republican governor is not on board with the proposed salary increases.
“As we are still recovering from the recession, the governor is concerned about the Legislature’s proposal to provide state employees with salary and benefit increases before we have fully funded education reform and job creation initiatives,” Martinez spokesman Scott Darnell said.
Meanwhile, Martinez is encouraged that the LFC proposal does not call for increased taxes on New Mexicans, Darnell said.
Martinez is expected to release her own budget proposal today. The Legislature will then consider both recommendations during the 30-day session that begins Jan. 17 before approving a final budget.
Smith and other top-ranking lawmakers warned Wednesday that the state has not fully recovered from a severe economic downturn and that new projects will be met with skepticism.
“I think we’ve learned our lesson,” Smith said. “We need to move ahead cautiously and make sure we are not funding too many new initiatives right now.”
After three years of budget cuts that reduced state spending by about $800 million, the legislative budget recommendation would increase spending by about $250 million – or about 4.6 percent – starting in July 2012.
More than half of the increased spending – about $162 million of the $250 million -would go toward public schools, higher education and Medicaid, the joint federal-state program that provides health care coverage to more than one in four New Mexicans.
Those three areas make up more than 70 percent of state’s current $5.4 billion budget.
While taking a cautious stance on spending growth, several members of the legislative budget panel expressed relief at the fact additional cuts won’t have to be made.
“At least right now, we’ve turned the corner and we’re not in free fall,” said Rep. Larry Larrañaga, R-Albuquerque.
Although funding for several agencies, including the Environment Department and the Indian Affairs Department, would be decreased under the legislative budget plan, LFC staff said the impact would be minimal. Those savings would be realized by eliminating some funded positions that have not been filled, they said.
The legislative budget proposal also includes about $23 million for early-childhood education programs, including a reading initiative touted by Martinez.
However, the proposal does not address the governor’s call to change the state tax code, partly by doing away with the gross receipts tax for about 40,000 small businesses across New Mexico.
Such tax breaks would have to be offset either by tax increases or spending cuts proposed by the Martinez administration, Smith said.
Other features of the LFC budget proposal include:
â– Nearly $50 million to boost the state’s contribution to the retirement plans of state employees, including teachers. An increased state contribution would mean more take-home pay for workers, who have had to funnel more of their paychecks toward future retirement benefits in each of the past two years under state budget-balancing maneuvers.
â– More than $17 million to fulfill a commitment for a greater state contribution rate to the Educational Retirement Board to shore up the fund. The Legislature has implemented four of seven staggered increases approved in 2005, but has postponed additional increases because of budgetary limitations.
â– An increase of $8.5 million, or 3.3 percent, for the Corrections Department to address potential increases in Medicaid, dental and mental health care costs for inmates in state prisons.
— This article appeared on page A1 of the Albuquerque Journal