In the race to become New Mexico's next governor, Democrat Diane Denish and Republican Susana Martinez have made financial promises that will be very difficult to keep when the winner takes office in January.

The candidates pledged at a recent gubernatorial debate on education issues to exempt public schools from additional budget cuts, and they vowed not to raise taxes. Both candidates also have said they would protect Medicaid from cutbacks.

The promises make for good politics but dicey budgetary policy.

New Mexico faces a projected deficit of about $230 million in the next fiscal year, according to the Legislative Finance Committee. That's how much money is necessary to maintain current government services and programs — from public schools and colleges to prisons and state police.

Public schools are the biggest piece of the state budget, accounting for 45 percent of spending this year.

Medicaid, which represents 11 percent of state spending, provides health care for the poor and uninsured children — about a half-million New Mexicans or roughly a fourth of the state's population.

If the candidates keep their promises to shield schools and Medicaid from cuts, it could require squeezing $230 million out of the remaining 44 percent of government to balance next year's budget.

Sounds easy, right?

Cuts of about 10 percent for other areas of government would be required next year to save $230 million if schools and Medicaid are exempt. That would be on top of reductions of nearly 14 percent — roughly $824 million — in state government since the 2009 fiscal year, according to the Department of Finance and Administration.

Consider this: 15 percent of the state budget goes to support colleges and universities, and 7 percent is for public safety operations, including prisons, state police, homeland security and the National Guard. Deep cuts in those programs likely would produce howls of protest.

Those areas of government — public education, Medicaid and public safety — make up 78 percent of the state's more than $5 billion budget.

Denish, despite opposing tax increases, said at the debate the state could come up with revenues by looking to close "tax loopholes."

She also has outlined proposals to save an estimated $450 million over five years by cutting appointive jobs in state government, consolidating some agencies, reducing the state's auto fleet and scrapping stalled capital improvement projects.

If that worked and delivered the expected savings, it could make a down payment on the more than $200 million deficit next year.

Martinez contends there's plenty of waste in government that can be trimmed.

At the debate, she pointed out that state government had grown by more than 50 percent since Richardson took office in 2003. That growth is down to about 34 percent because of recent budget cuts but public schools, and Medicaid account for three-fifths of the spending increases.

Sen. John Arthur Smith, a Deming Democrat and chairman of the Senate Finance Committee, predicts a "rude awakening" for Denish or Martinez if they try to balance the state's budget next year while following through on their campaign promises.

"They're not going to cut education and there's not going to be any tax increases. Those are contradictions," Smith said.

He predicted either Denish or Martinez will "have to break 50 percent of their campaign promise," based on current revenue projections.

According to the latest revenue forecast, the state is expected to collect about $5.4 billion in revenues in the 2012 fiscal year, which starts next July.

However, the state is on a course to spend about $5.6 billion this year — with federal economic stimulus money accounting for more than $400 million of that, mainly to support schools and Medicaid. That federal money is how Richardson and the Legislature have largely shielded those programs from deep cutbacks so far.

The federal money will disappear next year, and that means New Mexico must come up with extra revenues or reduce spending on programs to plug the hole in the budget. Otherwise, schools and Medicaid won't escape cuts next year.



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