Governor calls for more belt-tightening
Sweeping cuts in Martinez’s proposed budget ‘devastating,’ Democratic lawmakers say
WALBUQUERQUE ith New Mexico’s finances still mired in red, Gov. Susana Martinez on Tuesday proposed a lean budget for the coming fiscal year, calling on lawmakers to close the deficit with further cuts in government spending, including making public employees divert more of their pay to fund their own retirement accounts.
Martinez reiterated her opposition to raising taxes to balance the books and called for lawmakers to pull funds from government savings accounts.
She unveiled her $6.09 billion budget proposal at a charter school here one week before legislators gather in Santa Fe for a 60-day session likely to be consumed by concerns about the state’s depleted coffers.
Martinez would shrink overall compensation to state employees and public school teachers by reducing government pension contributions to the state’s two main retirement funds by 3.5 percent of pay. Government employees would contribute more to maintain the same benefits, with less take-home pay as a result. The Republican governor described her proposed budget as sending “a clear and strong message: it’s up to state government to tighten its belt, not New Mexico families.”
The governor proposed further cuts in funding for higher education and the Legislature, too, as well as reducing payments to local governments such as Santa Fe County that were intended to soften their revenue losses when New Mexico eliminated gross-receipts taxes on food several years ago.
Administration officials said her public pension changes are designed to prevent more drastic measures such as furloughs and salary cuts. Similar measures were implemented temporarily in the aftermath of the 2007 recession.
Carter Bundy, of the American Federation of State, County and Municipal Employees union, described the proposed change in pension contributions as a pay cut that would hit tens of thousands of New Mexicans.
“Governor Martinez wants to take $100 million or more out of the pockets of middle class and poor New Mexicans so she can keep giving tax breaks to out-of-state corporations,” Bundy said.
Democrats accused Martinez of doubling down on an approach to the budget they say has cut government “to the bones.”
“New Mexico deserves a realistic approach to the budget that invests in our state, instead of Governor Martinez’s irresponsible approach,” said Debra Haaland, chairwoman of the New Mexico Democratic Party.
Under the governor’s plan, the nearly across-the-board budget cuts that legislators exacted during a spe-
cial session last autumn would remain in place and some agencies previously spared would see funding reduced.
The proposed budget would also provide modest increases in funding for the Corrections Department, the Children, Youth and Families Department and the Veterans Services Department.
The state would pay an additional $26 million from its general fund to cover the costs of its growing Medicaid program, which Martinez expanded under the federal Affordable Care Act. But the governor’s proposed budget says that while enrollment has boomed and the health insurance program for low-income residents is on track to cover 920,000 New Mexicans by the end of June, the cost has declined per person, indicating efforts to control spending are paying off.
The proposed budget is smaller than the $6.47 billion spending plan Martinez put on the table last year. As oil prices slid, however, the financial outlook darkened for a state heavily dependent on oil and gas revenues. Lawmakers ended up passing a $6.2 billion budget, the leanest since 2009, then cut that down to about $5.7 billion during last fall’s special session, which was marred by election season rancor.
During that brief session Republicans pushed crime legislation such as a proposal to reinstate the death penalty while Democrats accused the GOP of lacking a plan to deal with the deficit.
Senate Majority Leader Peter Wirth, a Democrat from Santa Fe, said Tuesday the governor’s plan to close the deficit is the first she has presented in eight months.
The cuts legislators agreed on last year have not gone far enough, however, and lawmakers will still have to rebuild reserves as well as cover a projected shortfall for the current fiscal year expected to total about $66.8 million.
Martinez on Tuesday proposed closing the gap by sweeping up about $268.5 million in funds from various government accounts while also ensuring about $59 million in recurring savings.
The proposal includes taking $120 million from the cash reserves of local school districts — money the governor called a “slush fund.”
School administrators and teachers unions have sharply criticized proposals to draw from the accounts.
Districts rely on the money to finance operations as state and federal dollars roll in throughout the year, said Charles Goodmacher, director of government and media relations for the National Education Association of New Mexico.
“These cash reserves are in place because districts don’t start the year fully funded,” he said, describing the governor’s claims that the dollars amount to a “slush fund” as an “unreal statement.”
Public Education Department Secretary Hanna Skandera said Tuesday that no district would see its reserves depleted entirely but only drawn down to what she described as recommended levels.
Flanked by her Cabinet secretaries for education, child welfare, health and the chief of the state police, Martinez said that while her budget proposal would not furlough or lay off employees, state government must become more efficient. She calls for eliminating human resources departments at state agencies and consolidating the services under one office.
The governor’s comments on Tuesday left in doubt prospects for bipartisan budget agreement in a political environment that has shifted significantly over the last few months. Democrats in November won back a majority in the state House of Representatives and expanded their majority in the state Senate.
Martinez still wields veto power but recent budget crunching has fatigued even Republicans, who have grown weary of slashing resources for local colleges and governments.
The governor nonetheless blamed legislators for leaving the state with a deficit after the autumn special session, telling reporters that “difficult decisions were avoided during an election year.”
Leading Democratic legislators, in turn, called the governor’s proposed cuts “devastating.”
Wirth said the Senate agrees with the extent to which the governor has proposed restoring reserves but raised concerns about her call to sweep money from the reserve accounts of local school districts.
“Calling these local school reserves a ‘slush fund’ is disheartening,” Wirth said in a statement.
The Legislative Finance Committee is expected to present its budget plan later this week. How sharply it differs from the governor’s proposal could reveal how difficult agreement on the state’s fiscal blueprint could become.