Governor seeks more cuts, including reduced employee take-home pay

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Gov. Susana Martinez proposed cuts to take-home pay for state workers and teachers and other budget reductions on Tuesday to address a projected $69 million shortfall in the current fiscal year and keep a balanced budget for the next year.

Susana Martinez

Heath Haussamen / NMPolitics.net

Gov. Susana Martinez

Predictably, the governor continues to oppose tax increases to balance the budget.

“This sends a message that it’s up to state government to tighten its own belt – not our hardworking families,” Martinez said in a news release.

Also predictably, Democrats weren’t happy.

“The real challenge with the governor’s solvency proposal is in implementing these devastating cuts with less than five months remaining in the 2017 fiscal year,” said Sen. John Arthur Smith, D-Deming and chair of the Senate Finance Committee.

“Governor Martinez’s priorities are clearly outlined in her budget, and her priorities clearly do not put New Mexico families first,” said Debra Haaland, chairwoman of the Democratic Party of New Mexico.

The state has already made several hundred million dollars in cuts to the state budget in recent months. Those cuts have resulted in layoffs at New Mexico State University and elsewhere.

The governor’s new proposal set the stage for a battle as the Legislature convenes for a 60-day session next Tuesday: With Democrats retaking control of the House of Representatives this year, many in that party are prepared to fight against additional cuts and instead push tax increases to address the budget shortfall.

Martinez isn’t having it. Her proposal would reduce take-home pay for tens of thousands of state employees and teachers by increasing their contributions to their retirement plans — and reducing the state’s contributions — by 3.5 percent.

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Martinez also proposes eliminating the distribution of so-called “hold-harmless” payments to cities and counties that have raised gross receipts taxes to compensate for an eventual phase-out of those payments, including the City of Las Cruces and Doña Ana County.

She wants to extend budget cuts enacted last fall for another fiscal year, and increase the cuts to the budgets for higher education and the Legislature.

And the governor proposes taking nearly half the money out of what she called “slush funds” held by school districts around the state — $120 million of $232 million currently in those accounts.

Rhetoric aside, as NMPolitics.net reported during last year’s special session in October, those aren’t “slush funds.” In October the Las Cruces Public Schools had $8.4 million in its reserves. Spokeswoman Jo Galván said that money was set aside to pay expenses such as insurance until federal reimbursements came in and cover contingencies like increased utility costs in an unusually cold winter.

Senate Majority Leader Peter Wirth, D-Santa Fe, said senators were glad to see a plan from Martinez but he was concerned by her proposal to take money from school districts. “Calling these local school reserves a ‘slush fund’ is disheartening,” Wirth said.

Regardless, Martinez said her proposal would “reduce the size of government” while protecting critical services and leaving some money in reserves.

“If we abandon our reforms, continue growing government, and look to taxpayers to bail us out, we should not expect the bright future that is within our grasp,” Martinez said.

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