It may be the longest-running debate in the New Mexico Legislature. And now, it’s back.
Gov. Michelle Lujan Grisham said Tuesday she would support an effort to tap New Mexico’s nearly $18 billion Land Grant Permanent Fund in order to help the state shore up what is projected to be a huge revenue shortfall driven by the novel coronavirus pandemic.
“I think we can make a legitimate case that that is an appropriate use in this extraordinary emergency,” the governor said.
For years, lawmakers have proposed legislation calling for a constitutional amendment to access more of the land grant fund to pay for early childhood education initiatives. Fiscal conservatives in the state Senate repeatedly have blocked such efforts, stressing the need to safeguard that money. In doing so, they drew the ire of the measures’ proponents and progressives.
By the end of the legislative session earlier this year, it appeared the eternal debate might be put on the back burner after the governor and legislators came up with a compromise: the creation of a new early childhood trust fund using money from other sources.
But that was before plummeting oil prices and the COVID-19 outbreak unexpectedly ripped a giant hole in state revenue. Key legislators have projected the budget shortfall will be around $400 million for the current fiscal year, while revenue for the 2021 fiscal year could be $1.6 billion below original expectations.
Now, it appears tapping the land grant fund is being considered as a potential fix — not for early childhood education but for the state budget itself.
“I think it’s an idea that has merit, and I expect it to be on the table for the special session,” Lujan Grisham said.
Lawmakers are expected to hold that special legislative session in June to patch the most pressing gaps in the budget, and they almost certainly will need to continue their damage control during next year’s regular session.
So far, legislators have mentioned a wide array of ways they could reduce spending, from cutting planned pay raises to reducing money allocated to the new early childhood fund.
They also plan to tap the state’s reserves, which were set at 25 percent of next year’s budget, and are hoping for federal funding from another coronavirus-related stimulus package that could be forthcoming from Congress.
Lujan Grisham said she would favor accessing the land grant fund for one or two fiscal years in addition to tapping reserves and said legislators had been discussing the idea.
However, it appeared Tuesday that such an effort could run into resistance from the same legislators who have opposed dipping into the fund in the past.
“I still don’t think it’s responsible,” said Sen. John Arthur Smith, the Senate Finance Committee chairman who has long blocked efforts to access the fund. “I fully understand the desire to try and rob Peter to pay Paul, but I think there are other things that can be done between now and then.”
Smith, D-Deming, said his main concern was that dipping into the fund for one fiscal year could open the door to continuing to draw from it again and again. He added that’s likely since legislators expect the current economic downturn to last a considerable amount of time.
He also said the current shortfall is so large it requires a more complex response than just tapping permanent funds and reserves.
“This debate needs to be expanded far beyond hitting the piggy bank,” Smith said. “When you have a cancer to your revenues, a shot in the arm isn’t going to take care of that cancer.”
There could also be legal obstacles to an effort to tap the fund right away, as it would likely require a constitutional amendment that would need legislative approval and would then be put to voters.
According to Article 19 of the New Mexico Constitution, amendments can be proposed by legislators “at a regular session.” The article does not mention the possibility of proposing them at special sessions.
The next regular session is not scheduled to occur until January.
The Land Grant Permanent Fund held $17.9 billion as of March 31, according to the State Investment Council. The fund makes regular distributions to public schools and other beneficiaries.