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Governor faces tough decisions on worsening budget crunch

SANTA FE – Gov. Susana Martinez returned to New Mexico late last week from the Republican National Convention to a jolt of cold water – renewed bipartisan alarm over the state’s budget situation and calls for a special session from the Senate’s most respected budget voice.

MARTINEZ: No plan yet for plugging shortfalls

MARTINEZ: No plan yet for plugging shortfalls

Martinez, who has touted her administration’s budget-balancing acumen in the past, will face tough decisions in the coming months over how to address the current budget crunch in the midst of an election year.

She has not announced a plan for plugging projected budget shortfalls for both the current and just-completed budget years that could together exceed $600 million, but a spokesman said last week that Martinez is open to meeting with lawmakers and plans to tread carefully.

There was no update Monday from the Governor’s Office about a possible special session, but some lawmakers said there’s no sense in delaying budgetary decisions for too long.

“We’ve got to get ahead of the eight ball,” said Sen. Steven Neville, an Aztec Republican. “Our priority, whether we get re-elected or not, is to run the state the way it’s supposed to be run.”

Sen. John Arthur Smith, D-Deming

SMITH: Says state’s finances are “in crisis”

He said he largely agrees with Senate Finance Committee Chairman John Arthur Smith, D-Deming, who recently described New Mexico’s finances as “in crisis” and urged Gov. Martinez to call a special session as soon as August.

Smith also said last week that the state is facing a $150 million-plus deficit for the budget year that ended June 30, along with a potential shortfall in the new budget year of up to $500 million. The budget crunch is largely due to falling oil and natural gas prices, which have had a ripple effect and meant lower-than-expected tax revenues in several sectors.

Rep. Jimmie Hall, R-Albuquerque, vice chairman of the Legislative Finance Committee, said he’s had recent talks with Martinez administration budget officials, but “nothing has been decided.”

“I’m looking for her leadership and her team’s leadership on which way to go,” Hall said in an interview.

Meanwhile, Rep. Luciano “Lucky” Varela, D-Santa Fe, a former LFC chairman, said a special session could be limited to a few days if legislative leaders could cobble together a budgetary plan beforehand.

He also urged Martinez not to rigidly adhere to a “no tax increase” stance she has held since taking office in 2011.

“I’m very concerned the governor will not consider revenue enhancements,” said Varela, a 29-year lawmaker who is not running for re-election this year. “I wish she would reconsider.”

The Martinez administration has taken a restrained approach on the budget, limiting nonessential spending by reducing state employee travel across all agencies, while urging legislators not to “overstate” the problem.

Martinez has called two special sessions since taking office in 2011 – a 2011 special session focused on the once-per-decade task of redistricting and a 2015 special session was called to revive a $295 million public works bill that died during that year’s 60-day regular session. A special legislative session this year would likely cost $50,000 for each day lawmakers spend in Santa Fe, based on figures from recent special sessions.

State Democratic Party Chairwoman Debra Haaland recently blamed Gov. Martinez’s economic policies for the state’s budget woes, saying Republicans had put “corporations ahead of teachers and students.”

A spokesman for the two-term GOP governor said Monday that it’s “ridiculous” for critics to suggest Martinez’s handling of the state economy has played a role in the steep revenue downturn.

“If Democrats want to argue that we shouldn’t be diversifying our economy, or that we should’ve been raising taxes on business as opposed to cutting taxes, they have the right to do that,” Martinez spokesman Michael Lonergan said. “But that’s an approach that has failed New Mexico for decades and, now, it is more important than ever before that we grow the private sector across a diverse set of industries so that we’re not so reliant on federal government spending and oil/gas activity.”

Sen. Bill Soules, D-Las Cruces, said in a recent social media posting that the governor and House GOP leadership have been in “denial” about the state’s budget crunch, a claim he reiterated in a Monday interview.

However, he also said both sides must be willing to give ground to find a budget deal, adding, “The fact there’s an election shouldn’t come into play with us having to do our jobs.”