Santa Fe, NM- The Legislative Finance committee releases to staff a daily update on the state’s fiscal health as the session budget is drafted and moves through the legislative process. House Republican leaders have become concerned following a recent summary that was shared, revealing the precarious finances of the New Mexico General Fund even in the state’s second record surplus year. The state budget, in its House approved version, appropriates over $8.1 billion and projects revenues will be $7.9 billion. The financial summary makes clear that the state’s operating reserve will be $94 million in the red, creating a potential constitutional crisis and leaving the state in a dangerous budget position given New Mexico’s undiversified economy.
The state budget is now in the process of being discussed by the Senate. Should the Senate not properly vet the House Democrat approved budget, and cut nearly $200 million or more, New Mexico finances will face instability and the Legislature will likely be forced to convene in a special session to readjust and balance the budget.
The New Mexico Legislature is constitutionally required to provide a balanced budget during each yearly session. The last time the Legislature convened in a special session, was during a financial crisis that stemmed from declining oil and gas revenues. What makes this negative budgetary outlook concerning is that New Mexico’s record surplus revenues should more than provide for government operations and additional programs.
“It feels like we are repeating ourselves by drawing attention to the budget issues. It is easy to dole out cash as a lawmaker in good years, but it is excruciating to cut funds once the crisis arises,” said House Republican Leader Jim Townsend, “We owe it to every New Mexican to responsibly budget and spend wisely in the best interest of our state’s future.”
The current budget proposal would bring two-year spending increases to 20% in more spending since the previous administration. The mad dash to spend the surplus dollars has lawmakers dipping into reserve funds to the tune of $242 million to fund their commitments. Additionally the Legislature has, at this point, proposed the creation 61 new funds that are separate from the state budget in HB 2.
“I foresee an interesting debate between the Democrats who control state government, they all are grabbing for cash and despite oil and gas giving providing them an abundance of new money they still are over-spending,” said House Republican Whip Rod Montoya, “I am terrified of what the Democrats will do once those dollars go away when they accomplish destroying the industry funding our state.”