Absent a massive and highly unlikely increase in the global price of oil and natural gas, New Mexico state government must come up with $700 million or more in spending cuts very soon.
Budgeted spending in fiscal year 2017, which began July 1, is expected to exceed revenue by $458 million. The state had to empty its reserve fund to pay its 2016 bills, money the government wants to replace so it can cover future deficits, including a projected $211 million deficit in the 2018 fiscal year. A special legislative session is expected to convene soon to balance the current budget and replenish the reserve fund.
Since Gov. Susana Martinez is adamantly opposed to tax increases and new taxes and since our constitution forbids the state from running a budget deficit, legislators will have to cut spending in this fiscal year.
At times like these, I’m reminded of the Gospel of Matthew, where it is written, “Where your treasure is, there your heart will be also.” A government budget is an expression of the values elected officials believe the citizenry shares. In a perfect world, there would be the time, energy and political maturity to review what our state values and then carefully cut those things that we the people do not value.
There doesn’t seem to be enough time to make those value judgements during the state’s regular biennial 60-day legislative sessions. There certainly isn’t going to be time in a special session that might last a week at most. Expect across-the-board cuts.
Conveniently, the state of New Mexico publishes its own gospel every January in which one can read the value judgements our state has made in the past few years. It is the Report of the Legislative Finance Committee. Its print version comes in three dense volumes. It explains what legislators were thinking when they consolidated state police agencies and why they have increased spending on early childhood education. If you want to find our heart, the LFC report tells you where our treasure is.
In general terms, the LFC says that New Mexicans value public and higher education; health care for lower-income families, public employees and retired employees; and public safety, including State Police, corrections and the judiciary. That is where 80 percent of our general fund is spent.
For years, health care providers, insurance companies and policy thinkers pleaded with state government to do something about New Mexico’s large uninsured population. There were years when almost a quarter of our population had no health care coverage.
Because people get sick and injured even if they don’t have insurance, our hospitals and medical professionals treated thousands of people each year who did not pay their bills. The cost of their care was shifted to people who did have coverage, which raised premiums on those who had insurance.
The Affordable Care Act gave New Mexico federal funds to provide Medicaid to cover any citizen earning 138 percent of the federal poverty level or less. Until then, most Medicaid recipients were children, the disabled and the elderly. Our uninsured rate went down to 14.5 percent at the end of 2014, compared with a national rate of 11.7 percent.
There are now almost as many people on Medicaid in New Mexico as there are in the state’s workforce. The problem is that while the federal government paid 100 percent of the cost to expand Medicaid, its share of spending goes down to 95 percent of the cost, leaving New Mexico with a $41 million tab.
We said we valued getting more people coverage. Now that we face the bill, have our values changed?
We complain that our prisons should be equipped with revolving doors, since it seems that no sooner is a criminal released than he is arrested again. The LFC says New Mexico has a higher recidivism rate than the surrounding states. Of the 4,000 people entering prison in 2014, 26 percent were there for parole violations.
It turns out we can lower recidivism by 12 percent if we spend $600 per inmate on education programs, according to the LFC. That means 12 percent fewer released prisoners get into trouble again. Is that worth $600 per inmate to us?
New Mexicans are appalled at our high public school dropout rate and the thousands of kids who do graduate but are academically unprepared to do college work. The LFC says there are proven ways to help kids at risk of academic failure, but while some states provide as much as 50 percent more funding for at-risk students than for other kids, New Mexico spends only 10 percent more, even though it ranks 25th among the states in per-student spending.
Assuming the LFC is right and those programs do work, are New Mexicans willing to spend what it takes to solve a problem we have complained about for years?
The cuts required amount to more than 10 percent of the 2016 budget. If we aren’t going to pay for the state services we want with new taxes, we are going to have to develop an unprecedented level of self-awareness to make sure we cut only those things we decide we don’t value.