The state appears to be moving toward a special legislative session where lawmakers may take a hard look at the budget increases they passed in February — decisions made before oil prices plunged to a two-decade low before a sharp rise Thursday, and before the coronavirus pandemic.
Democratic and Republican leaders in the Legislature agree: The public health emergency spurred by the coronavirus will likely force lawmakers to the negotiation table once again, this time to discuss whether the state will have the money to pay for the $7.6 billion budget passed by the Legislature and signed into law by Gov. Michelle Lujan Grisham.
House Speaker Brian Egolf, Senate Majority Leader Peter Wirth, Senate President Pro Tem Mary Kay Papen and Senate Finance Committee Chairman John Arthur Smith — all Democrats — said Thursday that a special session is likely.
“Quite frankly, I will just flat say: It’s not a question of degree on whether we should have a special session or not,” said Smith. “I don’t see any way we can avoid a special session. The question is: When do you time that special session?”
Wirth called the expected health and economic impacts of the COVID-19 pandemic the “perfect storm.”
“And that’s saying something after all we’ve been through on this oil and gas roller coaster the last number of years,” Wirth said. “You think you’ve seen everything, and then this comes along and we’re just in uncharted territory.”
State revenue surged in 2018 and 2019 from an oil boom in the Permian Basin, where one of world’s largest reserves has fueled spending increases for schools and other public services approved by the governor following the 2019 and 2020 legislative sessions.
But extreme price dives and subsequent boosts in the already volatile oil and gas market — along with the economic toll of severely limiting restaurants, bars, hotels and other businesses to slow the spread of the virus — is calling the fiscal year 2021 budget into question.
Earlier Thursday, Republicans called on the governor to immediately convene a special legislative session to discuss the economic impact of the effects and response to the global coronavirus outbreak as the state teeters toward a recession.
Republicans are fuming over a lack of communication between GOP minority leaders and the Governor’s Office on the potential economic impact of Lujan Grisham’s emergency decisions.
“We have people hurting all over New Mexico and we need to address those,” said House Minority Leader Jim Townsend, R-Artesia.
The price of oil, which fell to nearly $20 a barrel before rising Thursday, is “considerably below our budget forecast,” Townsend said. “And although I know we have some reserves … I don’t believe it’s prudent on our part to consume all of our reserves before we make a decision.”
House Republican leaders sent a letter to Lujan Grisham detailing their concerns amid worry over falling oil prices in a state that is heavily reliant on the oil and gas industry. They called for budget cuts based on new revenue projections and urged saving current reserves.
“We believe it to be incredibly important to include the state Legislature in these extremely important decisions before they are made. The gravity of these decisions, and the effects on our constituents demands our involvement,” the letter said.
Republicans said a special legislative session should happen immediately.
“If the answer is: ‘Let’s wait till Trump sends us money,’ that’s kind fo a dereliction of duty,” said House Minority Whip Rod Montoya, R-Farmington.
“They need to come in and review everything they’ve done for the last two legislative cycles,” said New Mexico Republican Party Chairman Steve Pearce.”You’re talking about major hits to our budget approaching, I would guess, a billion dollars minimum.”
But Egolf and other Democratic leaders said a session will be more likely once Congress has approved a stimulus package and both the damage from the economic free fall and the virus itself are better understood.
“We will definitely have a special session, but Representative Townsend’s call for it is very premature,” Egolf said.
“Before we convene, we need to have a much better understanding of what the federal government is gonna do,” Egolf added. “There’s many options for assistance to states like we saw in 2009, and we don’t know what’s gonna happen with our state’s revenue.”
U.S. Senate Republicans want to send a $1,200 check to taxpayers, offer hundreds of billions in loans to businesses and create deep corporate tax cuts, the New York Times reported.
Prior to the Republicans’ letter — signed by Townsend, Montoya and Rep. Candy Spence Ezzell of Roswell — Egolf and Wirth, both from Santa Fe, said they discussed the possibility of a special session, including logistics on how to safely get 112 lawmakers and legislative staff in closed quarters without potentially circulating the virus.
Wirth and Egolf said they’re considering the logistics and constitutionality of hosting a “virtual session.”
Other Democrats agreed it’s wise to wait and see whether oil prices recover, how big of a hit the state economy takes and how much a federal stimulus package from Congress will help New Mexico before they begin considering further budget cuts beyond the line-item vetoes already approved by the governor.
Papen said she spoke with staff in the Governor’s Office Thursday about that necessity and came away convinced that lawmakers need to wait for the federal stimulus package before they start considering budget cuts.
Although Wirth, Papen and Smith could not say when that may happen, Egolf said he hopes they could wrap up a special session before July 1, when the government begins spending money appropriated by the budget passed this year. He stressed that the state has enough reserve funding to last until then.
In a letter to Egolf, Townsend, Papen and Senate Minority Leader Stuart Ingle that was provided to The New Mexican Thursday night, Lujan Grisham wrote that her administration’s priority has been addressing the urgent public health precautions.
“At the same time, we are attentive to the reality of declining revenues, immediate fiscal impacts, the medium-to-long-term economic impacts that will arise from this crisis — in clear terms the very real and everyday stresses it has on our businesses, their workers and governments responsibility to meet required public services,” the governor wrote.
“To prepare for a special session, I believe that we must first understand the long-term effects and needs arising from this emergency, have updated and reliable revenue projections, and have a clear picture of the full spectrum of assistance that the federal government will be providing to states,” the letter continued. “All of this information will be clarified in the coming weeks.”