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Saturday, March 1, 2003

House Passes $4 Billion Budget Plan

By Barry Massey
The Associated Press
    SANTA FE State spending on public schools, higher education and government agencies will increase by at least 4 percent next year under a budget proposal approved Friday by the House.
    Critics of the spending package warned that it charted a financial course likely leading to a budget squeeze for the state in the future or tax increases unless the economy grows robustly.
    "This appears to be the worst constructed budget we've had in years," said House Republican Leader Ted Hobbs of Albuquerque.
    Rep. Terry Marquardt, R-Alamogordo, said the proposed budget was "put together with bailing wire and bubble gum."
    The House approved the budget 43-20 and sent it to the Senate for consideration.
    The House bill allocates more than $4 billion for schools, colleges and universities, the judiciary and agencies ranging from corrections to tourism in the fiscal year that starts July 1. Included is financing for a number of Gov. Bill Richardson's proposals, including 6 percent pay raises for teachers. The budget provides for a $156 million increase, or about 4 percent over the current operating budgets of public education and agencies.
    Pending in the Senate is a companion spending bill, which will allocate nearly $56 million for requests of the governor and lawmakers. The two measures, when combined, will provide for state spending increases of about 4.4 percent next year.
    In response to questions during debate, Rep. Max Coll, D-Santa Fe, chairman of the House Appropriations and Finance Committee, acknowledged that the spending blueprint would leave the state facing a budget shortfall of more than $40 million in another year. Republicans contend the shortfall could be far larger.
    However, Coll maintained that the state would be able to meet its financial obligations in the next budget year.
    "I believe the bill will work," said Coll.
    The shortfall is built into the blueprint because it relies on about $16 million in one-time monies from school cash reserves to cover next year's operations. In addition, proposed 6 percent pay raises for teachers a centerpiece of Richardson's education agenda are financed only for about two-thirds of the year. That, in effect, leaves more than $20 million to be made up in the following year.
    Republicans complained that the budget was based on iffy assumptions, such as improved collections of taxes to pick up revenues, and used one-time sources of money such as school cash balances to pay for ongoing or "recurring" base budget expenditures. They also said that the cost of Medicaid was likely to continue to grow and demand a greater share of the state budget in the future.
    "All of these problems mean this will likely lead to a tax increase in the near future," said Hobbs.