Sen. Tim Jennings (Photo by Heath Haussamen)
The most recent revenue forecast released on Aug. 14 indicated that New Mexico’s economy and state revenues have fallen on very difficult times.
The fiscal year that we just completed (FY09) was about $300 million below forecast, and it is projected that state revenues will decline an additional $433 million in the current fiscal year (FY10). In total, state revenues have declined a staggering three quarters of a billion dollars in the last eight months.
Especially worrisome is the fact that most of the state’s revenue decline was in broad-based taxes — gross receipts, personal and corporate income taxes — not in oil and gas revenues, as has been the case in the past.
This drastic drop in revenue has created a situation in which the current fiscal year appropriations are $1 billion, or 17 percent, below the budget appropriations made before the budget was reduced last January. The state of New Mexico has never in its history experienced a fiscal crisis of this magnitude.
The outlook for next fiscal year is not as grim as the current fiscal year, with modest growth in revenue expected. However, it will still take about $250 million of cuts or additional revenues in FY11 to fit within projected revenue.
As the Legislature, the governor, state agencies and our educators prepare for the special legislative session in October, it is important that we prepare corrective action to deal with this monumental fiscal crisis. While I appreciate Governor Richardson’s recent call for state agencies to reduce spending, a 3 percent reduction may be inadequate to address the magnitude of the revenue shortfall.
I feel that we must be prepared to make cuts in current fiscal year spending of at least 5 percent.
But let’s be clear — I am sure the entire Senate will join me in ensuring that the budget is balanced in a fair and responsible way that maintains critical health, social services and education programs. To achieve the reductions, it’s critical to prioritize programs and eliminate unnecessary, wasteful, and even fraudulent spending.
I’m told that half the employees in one agency have smart phones at $1,000 per year. We can cut back on unnecessary travel. Some agencies have hundreds of contracts that could be pared back or consolidated for savings.
Finally, the state spends hundreds of millions of dollars for tax credits and exemptions that might also be adjusted to take the sting out of spending cuts. State government spending has grown about 40 percent in the last six years. That wasn’t sustainable, and now we have the opportunity and challenge to make government efficient and get the government we need and can afford.
Jennings is a Democratic state senator from Roswell and the Senate’s president pro tem.