SANTA FE, N.M. — New Mexico state government is looking for new ways to conserve spending as it crosses the threshold Friday into a new budget year, with the most pronounced changes set to ripple through Medicaid health care services for the poor and disabled.
State general fund revenues were lagging by nearly 10 percent as the books closed on fiscal year 2016, with dollars for May and June still untallied. The revenue downturn is principally linked to falling oil and natural gas prices, as well as reduced sales and corporate income tax receipts.
New austerity measures are driving up admission fees at world-renowned museums and historical sites, downsizing state health contracts for a nurse hotline and an elementary school dance program, and may cut off more than $130 million in annual state and federal spending on Medicaid starting July 1. Modest spending increases still are slated for prison guard and state police salaries, some teacher salaries, child protective services and prekindergarten.
New Mexico is one of just eight states in the midst of general fund revenue declines that are linked mostly to energy production, according to the National Association of State Budget Officers.
Where some states have tapped rainy day funds or raised taxes, New Mexico has allowed its operating reserves to shrink, swept small piles of cash from idle accounts and given state agencies new authority to transfer funds between programs. Gov. Susana Martinez has vehemently opposed any tax increase and vetoed budget provisions that she said could trigger across-the-board spending cuts.
Sen. John Arthur Smith, D-Deming, chairman of the Legislative Finance Committee that drafts the annual state budget, said the state economy and government revenues never really recovered from the 2008 recession and are still being held back by a “busted” oil industry and opposition to new taxes.
Without a modest revenue turnaround, he said, the state could be compelled to trim payrolls further or dip into the rainy-day portion of state settlement funds from tobacco companies, a remedy requiring legislative action.
Direct state government employment fell to 22,404 in June, down 34 positions from the previous year. State employment has fallen by about 3,250 people since its 2009 peak.
“Hope springs eternal that we maybe get an uptick in revenue, but it doesn’t look that way,” Smith said.
Meanwhile, the state is forging ahead with proposed cuts to Medicaid provider reimbursement rates designed to conserve up to $33 million in state funds for the year. Opponents of the plan say it will starve the local health care sector of roughly $3 in federal matching funds for Medicaid for every dollar the state saves.
The University of New Mexico Hospital — singled out for the deepest Medicaid reimbursement cuts — is among those questioning whether the state Human Services Department performed an adequate analysis of how the changes will affect access to medical services and facilities across the state.
The federal government put states on notice in 2015 that they must provide a monitoring plan of access to covered Medicaid services. The due date for the plans was recently pushed back from July to October. Human Services declined to say whether it has submitted an access analysis or when it would.
New Mexico Medicaid patients — 36 percent of the state population is fully enrolled — have increasingly used emergency rooms visits for routine medical conditions. State officials expect that trend to reverse as the newly enrolled patients grow more familiar with services.
The Human Services Department defended its approach to limiting Medicaid costs.
“Ensuring that we provide basic health care to New Mexicans who need it most is a top priority for us, which is why the Martinez Administration expanded Medicaid in 2014 and why these reforms are aimed at protecting basic health care benefits for our most vulnerable,” the agency said in an email statement.
At the same time, admission fees at most of New Mexico’s museums and historic sites are increasing for the first time in at least eight years, from the Museum of International Folk Art in Santa Fe to the Lincoln Historic Site that traces the history of Billy the Kid. There were 822,000 visits overall last year.
The fee increases are one consequence of a roughly $2 million budget shortfall at the Department of Cultural Affairs.
The agency also is limiting free Sunday admission for New Mexico residents to the first Sunday of the month and hopes to save more than $625,000 annually by eliminating 11 positions and adding three shared superintendents at historic sites.
Mike Lonergan, a spokesman for the governor, said state agencies continue to limit spending on travel, purchases and hiring.