State agencies told to expect flat funding

After years of spending cuts, no new money expected next year

SANTA FE — With a limited amount of “new” money projected to be available next year, a key New Mexico budget committee is cautioning most state agencies to brace for flat funding levels — again.

After several years of budget cuts and other costsaving measures, the Legislative Finance Committee plans to prioritize any available dollars in the 2018 legislative session for a few areas — including early childhood, K-12 education, Medicaid and substance abuse programs — and rebuilding the state’s depleted cash reserves.

“We’ll probably be looking at relatively flat budgets, but at least there’s a little room for funding critical areas,” said Rep. Larry Larrañaga, R-Albuquerque, an LFC member.

Meanwhile, any agencies seeking additional dollars should be able to show bang for the taxpayers’ buck.

The LFC’s recently released budget request guidelines for state agencies indicate the committee will place an emphasis on programs with “evidence of success” — both in terms of cost-effectiveness and outcomes.

The committee has been analyzing the cost-effectiveness of various state government programs since 2012, and legislators say they’re increasingly studying such data in making budget decisions.

Some programs that have shown positive per-dollar results include pre-kindergarten and adult mental health therapy, according to committee analysis, while programs like child care assistance have not proved as effective.

“I think we’ll look at some past successes (in putting together the budget),” said Rep. Patricia Lundstrom, a Gallup Democrat who is the LFC’s chairwoman. “And if there’s some things that haven’t been going in the right direction, then we’re going to have to change it.”

In all, about $25 million in “new” money — or funds in excess of this year’s $6.1 billion budget — is expected to be available in the coming fiscal year, according to a revenue estimate released last month.

Having any additional dollars would likely be a relief after lawmakers were forced to sign off on spending cuts and tap cash reserves for two consecutive years due to lower-than-expected revenue collections.

However, many agencies have had to pare back services and are currently operating with high vacancy rates. And there might not be enough dollars available in the coming year to fix those problems across state government.

“A lot of those needs haven’t gone away,” Lundstrom said. “I anticipate they’ve just been compounded.”

Some agencies, such as the state’s cash-strapped Public Defender Department, have already indicated they intend to request significant funding increases for the coming budget year, which starts in July 2018.

But with limited additional dollars likely available and Gov. Susana Martinez — who will wrap up her second term next year — holding to a firm “no tax increase” stance, such funding requests could face long odds.

Under state law, all agencies were required to submit budget requests to the LFC and the state Department of Finance and Administration at the start of this month.

After studying the requests, the Governor’s Office and the Legislature will release their own spending plans before the start of the 30-day legislative session in January.

In addition, Lundstrom said she’d like to pump the state’s cash reserve level back up to at least 5 percent of spending next year — reserves are projected to be about 3 percent in the current budget year — and eventually to around 10 percent.

That would require setting aside some — if not most — of the additional funding available in the coming year.

“It will be kind of tight again, but at least we’re not anticipating any big reductions,” Larrañaga said.