New Mexico could receive more than $1.5 billion in federal money from an economic recovery package under consideration in Congress, lawmakers were told.

However, the federal aid isn't expected to win approval in Congress and arrive in New Mexico before lawmakers move ahead with proposals to plug a projected $450 million deficit in the state's current budget.

Leaders of House and Senate budget panels expressed concerns Thursday about the lack of an agreement between the Legislature and Gov. Bill Richardson on legislation to plug the budget gap.

"I think we need to get on with corrective action," said Sen. John Arthur Smith, a Deming Democrat and chairman of the Senate Finance Committee.

If the budget deficit isn't fixed soon, he warned, the state could face legal questions over whether it has the authority to pay its bills in the coming months. The current budget year runs through the end of June.

To resolve the budget shortfall, lawmakers and the administration have proposed cutting spending — including for public education and Medicaid — as well as taking money from cash reserves, canceling capital improvements and collecting more revenues without a general tax increase. The governor and lawmakers agree on many provisions, including a proposal to speed up some corporate income tax payments for a one-time gain of $65 million.

However, there's no agreement yet on capital projects: how much to chop and which projects will be scrapped.

Katherine Miller, secretary of the Department of Finance and Administration, said Richardson was meeting with legislators and trying to determine the "parameters" of what capital project cuts the Legislature would accept.

Rep. Luciano "Lucky" Varela, D-Santa Fe and deputy chairman of the House Appropriations and Finance Committee, complained that the administration has yet to provide the Legislature with a list of capital projects it proposes to eliminate. The Legislative Finance Committee, a permanent budget oversight committee, has recommended canceling $163 million worth of projects, including some that were sponsored by Richardson.

Members of the Senate and House budget committees met jointly to review proposals for dealing with the state's projected budget deficit. They also received preliminary information on the federal money states could get under economic recovery plans in Congress.

According to an analysis by Federal Funds Information for States, a proposed economic stimulus package in the U.S. House could deliver at least $1.5 billion to New Mexico for certain programs, including $157 million for Medicaid this year and $169 million in 2010. Medicaid provides health care for the poor and uninsured children in New Mexico.

There could be $281 million in federal aid for highway construction, $115 million for school construction and more than $200 million to help schools with costs of special education programs and to help disadvantaged students, according to an analysis distributed to legislators.

However, legislative staff cautioned lawmakers that the additional federal money — if it's a one-time grant to states — could complicate New Mexico's budget in coming years because lawmakers would need to find state money to replace the federal aid used to pay for services and programs. New Mexico faces a bleak state revenue outlook in the upcoming budget year — 2010 — and the prospect of lean years after that.




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