Reports about the coronavirus were starting to circulate in late February when the Legislature was completing work on the state budget, but they apparently didn’t reach the Roundhouse. Lawmakers passed a record $7.6 billion budget, an 8 percent hike from the previous year, with large salary increases for state government workers.
By the time the signing period ended on this year’s bills, it was clear that they had seriously overspent. Lujan Grisham vetoed capital outlay projects, but that wasn’t nearly enough to make up the deficit.
It wasn’t just the shutdown of our nation’s economy from the coronavirus pandemic that cut into New Mexico’s revenue. In March, a dispute between Russia and Saudi Arabia regarding oil production resulted in a glut on the market and sent prices tumbling to below zero at the height of the crisis.
Our state’s economy is so closely tied to the oil and gas industry that for every $1 change in that market, we will either gain or lose some $22 million. Prices are back up to about $40 a barrel, but that is still $10 short of what the budget was based on.
Lawmakers did just enough in the special session to get through this fiscal year. They trimmed about $600,000 from the budget, bringing it down to about $7 billion. They were able to accomplish that primarily through reductions to agency budgets.
That, along with one-time federal aid money, should be enough to keep us out of the red this year without making tough decisions on things like the sustainability of recently passed salary increases.
But, it is estimated that lawmakers will need to cut as much as $2 billion from the budget when they meet in January, 2021.
It is, perhaps, appropriate that the tough decisions will be left to what will be the newly elected Legislature of 2021. The group that met for the special session last month was essentially in lame-duck status, following the defeat of Sen. President pro tem. Mary Kay Papen and Finance Committee Chairman John Arthur Smith in the Democratic primary.
Smith, who served in the Senate for 30 years, has been making tough decisions for more than two decades as a leader of the Finance Committee. I was covering the Legislature in Santa Fe and had a ringside seat as Smith worked to restrain the excesses of the Richardson administration.
Smith was tagged with the nickname “Dr. No” for his refusal to consider bills to tap into the permanent fund to boost spending for early childhood education. That and other progressive bills routinely died in Smith’s Finance Committee without ever being put to a vote, making him a target for frustrated activists in his own party.
Smith was defeated in June by Neomi Martinez Parra, a younger, more progressive candidate who is more in step with where the party is today. That’s probably also true for Carrie Hamblen, who defeated Papen in the primary
If they win in November, it will be up to them and the other members of 2021 to figure out how to cut $2 billion while still abiding by a court order to increase spending on education.
Walt Rubel can be reached at firstname.lastname@example.org.
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