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.

Reporter

Jens Gould covers politics for the Santa Fe New Mexican. He was a correspondent for Bloomberg News in Mexico City, a regular contributor for TIME in California, and produced the video series Bravery Tapes.

(16) comments

Jo Ann Maes

Additionally, the distribution of funds should be distributed proportionately to all municipalities, not ignoring small municipalities along the Rio Grande Corridor and specifically to those municipalities outside of the corridor through grants and Revolving Loan Funds to existing and start-up businesses to stimulate economic development. As Albuquerque, Santa Fe and Las Cruces continue to grow, many municipalities are losing population at devastating levels as evidenced by school closures statewide.

Jack Maes, Contributor.

Jo Ann Maes

The Governor and Legislators should tap the Permanent Find; however, they must act fiscally responsible during future legislative sessions if the goal is to replenish the fund based on commitments to beneficiaries by statute and to balancing the budget.

New Mexico's Permanent Fund is funded largely by oil and gas royalty revenues which have been at record levels over the past few years and this has created over one billion dollars for legislators to distribute annually to county, municipal governments and non-profits statewide.

The Governor should virtually convene a special session of the Legislature, if possible, to develop a Strategic Plan to determine the financial need statewide, distribution of funds and whether the permanent fund can sustain the financial impact based on committed financial obligations to beneficiaries and to future oil and gas revenue projections.

Alfred Padilla

I will vote NO if it goes to the voters!

Maxwell Vertical

The Land Grant Permanent Fund acts like an endowment. Investment returns on the corpus are earmarked for specific programs, primarily in education. It's not a rainy day fund.

If corpus is redirected to fund state operations, returns and funding of designated programs will be reduced. As the article said, it would require a constitutional amendment that would have to be approved by votes.

Joe Brownrigg

Every opportunity to try to take down the governor only spills more confusion and distrust.

In contrast to this, let's take advantage of this situation, rather than treat it as a threat. Yes, tap the Permanent Fund. That's what it is there for. Take it a step further. Invest in an employment program by creating more solar power and high speed internet! When the eyes stop rolling, consider the boost this would give to the economy, to the employment status, and to the future of the state and environment.

John Arthur Smith never met a program he didn't love to say "NO" to. Let's say "YES" to this opportunity instead.

Chris Mechels

After the Governor, and the Trifecta, throwing a "Pork Party" last year, now they want to tap the Permanent Fund, which is in trust for future generations. Robbing their kids and grand kids, for their own incompetence.

Thank heavens for Senator John Arthur Smith, who prevented the Pork Party from getting completely out of control.

MLG will, of course, want to bail herself out, but that should not be allowed. They can find the money, right where they put it, in the pockets of their cronies.

kyle renfro

LETS WAIT UNTIL SHE HAS SPENT ALL MONEY POSSIBLE, TO INCLUDE THE LEFTOVER CHANGE IN THE CUSHIONS IN THE GOV MANSION, BEFORE SHE OPENS THE STATE

Jim Klukkert

Correct me if I am wrong: I always understood the Permanent Fund was in place for a Rainy Day. It is now pouring cats and dogs. YES, Tap the Fund!

Bill Cass

Perhaps if she and the legislature hadn't spent our surplus like drunken sailors this wouldn't be necessary.

Scott Smart

Common misconception jim. Permanent fund is not a rainy day fund.

Jim Klukkert

Thanks Scott.

Maxwell Vertical

It would require a constitutional amendment that would have to be approved by voters.

Jim Klukkert

Thanks M. Vertical.

Orlie Romero

Added; tap the fund to get us on track, by then fuel will be back and taxes will be there guaranteed. With people itching to get out fuel costs will definitely rise and everyone will be willing to pay a premium!

Orlie Romero

Taking initiative is what is called for, keep NM progressing without getting bailed out of this mess by feds and not harming employees and schools and she will be viewed as top tier leader. Hope she can do it, IMO, great decision!

Emily Koyama

She may be "viewed as a top tier leader" by those who benefit from the plundering of the permanent fund, but history will not be kind to her after the long term damage to the fund has been tallied. It will, in fact, no longer be a "permanent" fund.

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