2019 outlook
There’s no shortage of ideas for spending projected $1.1 billion
SANTA FE — An extra billion dollars can go fast.
Gov. Michelle Lujan Grisham and legislators will dedicate much of their energy this session to crafting priorities for the $1.1 billion in projected “new” money expected to be available the next budget year.
And there’s no shortage of ideas. Perhaps the biggest bill coming due is for New Mexico’s public school system. In a landmark decision last year, a state judge ruled that New Mexico is violating the rights of Native American students, English-language learners and other at-risk students by failing to provide them with an adequate education.
No one has offered a firm estimate on how much it would cost to carry out the judge’s order to develop a sufficient funding system, but it could eat up much of the new money.
And that’s on top of other ideas legislators are kicking around — maintaining state reserves of 20 percent or more, shoring up the state’s two public retirement systems, addressing a backlog of unpaid film incentives and fixing roads among them.
Moreover, lawmakers say they’re reluctant to spend all the extra money on recurring operations, or obligations that will continue into the future, such as increased salaries.
New Mexico is still emerging from a budget crisis that damaged its credit rating and almost exhausted its financial reserves. Some of the state’s critical sources of revenue remain tied to volatility in the oil and gas industry.
“Combined with growing concerns about a possible impending recession, the state should proceed with caution in crafting a budget,” state economists said in a 26-page report to the Legislative Finance Committee last month.
State officials also say New Mexico has been putting off major expenses in recent years.
Next year, they say, may be the time to fill some potholes and replenish speciality funds that gave up cash to help the state pay its bills in leaner budget years.
Sen. Steven Neville, R-Aztec, said late last year that he expects the education lawsuit and state reserve levels to be major costs. Reserves are critical, he said, to avoid further downgrades to New Mexico’s bond rating.
After that, Neville said, “We’re going to have lots of folks with their hand out. We’re going to need to fix some holes from the last few years when we didn’t have a lot of money.”
An oil boom in the southeastern part of the state is fueling New Mexico’s budget growth but also placing a strain on the area’s roads and housing market.
Overall, recurring state revenue in the fiscal year that begins July 1 is expected to hit $7.4 billion, or nearly $1.1 billion above this year’s spending levels.
Both the executive and legislative branches of state government are expected to issue budget proposals that will serve as blueprints for the legislative session starting Tuesday.
Early discussions have made it clear just how quickly the extra money could be spent. Among the ideas that surfaced in legislative meetings and in interviews:
Establishing a funding plan for public education to respond to the court ruling. Lujan Grisham said the costs could reach $750 million to $1 billion.
Addressing a projected backlog of unpaid film incentives expected to hit $250 million by this summer.
Reducing the number of people waiting for developmental disability services under the “DD Waiver” program. Some families wait more than a decade for a loved one to start receiving services under the Medicaid-funded program. It would cost the state about $65 million a year to reduce the waiting list by half, though that much might not be necessary the first year, according to legislative estimates.
Overhauling the state tax code. Supporters say the changes should be revenue-neutral, but legislative analysts have suggested setting aside a buffer of $200 million, just in case.
Providing pay raises to public employees, perhaps targeted for teachers, police and correctional officers.
Shoring up New Mexico’s pension system for teachers and public employees.
Catching up on one-time expenses. Ideas include improving state roads, extending broadband internet services into rural areas and funding infrastructure projects to aid in economic development.
Providing extra money for early childhood education programs and mental health services.
In her Jan. 1 inaugural address, Lujan Grisham described increased spending on pre-kindergarten and other early childhood programs as a worthy investment.
“For the first time in years, we have a checkbook to go with our credit card … and we know the return on these investments is a generation of children and families transformed,” Lujan Grisham said.
Journal Capitol Bureau Chief Dan Boyd contributed to this article.