The Roundhouse in Santa Fe (Photo by cjc4454/flickr.com)
Newly reworked bill would cut most state agencies by 7.6 percent, implement smaller cuts to education
The House approved late Thursday a newly reworked budget bill that makes deep cuts – 7.6 percent – to most state agencies, but smaller cuts to education, including trimming less than 1 percent from the budgets of K-12 schools.
“We need to stop the bleeding, and that’s what we’re doing here today,” Rep. Al Park, D-Albuquerque, said just before the House voted to approve the bill.
Representatives approved the new version of House Bill 17 on a vote of 37-31. Earlier in the evening, it was unveiled in the House Appropriations and Finance Committee and passed on a vote of 13-5, with all Democrats on the committee and Republican Jeanette Wallace of Los Alamos voting for it.
The Senate is expected to take up the measure today, with the goal of finalizing the legislation and adjourning after a week of deliberations on how to plug a budget shortfall of at least $800 million that spans the previous and current fiscal years.
House approval of the new bill followed a day of intense behind-the-scenes wrangling. The House appropriations committee had approved an earlier version of the bill on Wednesday, but it quickly became clear that the earlier version would not have passed the House.
That version would have cut the budgets of most state agencies by 4 percent, but some lawmakers said it didn’t make deep enough cuts to recurring expenditures to seriously address the shortfall. By the evening, the new bill with its deeper cuts was unveiled.
Even as the House approved the bill, there was a sense that the Legislature won’t be done dealing with the budget crisis when this session adjourns. Earlier in the day, the New Mexico Independent reported that a shortfall of as much as $1 billion is possible when the Legislature convenes in January because much of the fix moving forward right now involves plugging the hole with non-recurring funds.
The governor didn’t allow discussion of revenue-raising measures during this session, but has created a working group and says tax increases and other measures will be on the table in January. Park referred to that Thursday evening.
“The simple fact of the matter is… we must do two things: We must reduce government spending – no question about it. And we must raise revenue – no question about it,” he said. “We cannot balance the budget with just one or the other.”
The bill’s details
Like the previous version of the bill, the version approved by the House Thursday night would make the following cuts to education:
• Four percent cuts to the “instruction and general purposes” categories in the budgets for higher education institutions, and 6.5 percent cuts to all other categories for higher education, “including research and public service projects.”
• Two percent cuts for most public school budget categories, but 6.5 percent cuts for a few areas including transportation, dual-credit instructional materials and the Indian education fund. Those cuts would also apply to the New Mexico Military Institute, New Mexico School for the Blind and Visually Impaired and New Mexico School for the Deaf.
However, while making initial cuts of 2 percent for public schools, the bill would also appropriate $29 million for the state to absorb property insurance premiums school districts are currently paying. With the state picking up that tab and freeing up some money for school districts, the overall cut to most budget categories for the public schools would amount to less than 1 percent.
The Senate unanimously passed a similar measure to fund property insurance premiums earlier Thursday.
The new version of House Bill 17 would cut the budgets of the judiciary, district attorneys, public defender and attorney general by 2 percent, and the budgets of elected officials other than the AG and governor by 4 percent. It would cut Medicaid funding by $4 million.
The bill also requires Gov. Bill Richardson to reduce spending on political appointees – so-called exempt employees – by trimming the salaries and benefits of at least 80. The sponsor of the bill, Rep. Luciano “Lucky” Varela, D-Santa Fe, said during floor debate that was added to the bill to “give the executive the opportunity to exercise leadership.”
The previous version of the bill “encouraged” the governor to cut spending on exempt employees but did not require it. Some 62 exempt positions are currently vacant, so the governor would have to cut 18 additional jobs.
Other bills moving forward
Other bills to help fix the budget shortfall also moved through the process Thursday. House Bill 6, which would authorize the transfer of $225 million from the state’s cash reserves, passed the House on a vote of 45-24 and now heads to the Senate for consideration. The bill also allows the transfer of another $115 million at the end of the current fiscal year if there’s a deficit.
Meanwhile, the Senate approved Senate Bill 29 (it’s not yet online), which would free up $136.1 million in capital outlay funding to address the shortfall, on a vote of 37-4. But those capital outlay projects wouldn’t be cancelled if the bill is approved by the House and signed by the governor. That’s because the bill authorizes the issuance of severance tax bonds to fund the 243 projects for which the capital outlay money was originally appropriated.
The Senate also approved House Bill 16, which cuts the Legislature’s budget by 5.3 percent and would save an estimated $839,000 this year. That bill now heads to the governor.
A prior version of this posting incorrectly stated that the bill would have required the governor to cut 80 political appointees’ jobs.