Gov. Michelle Lujan Grisham signed the state’s new $7.6 billion budget Wednesday, while cutting some capital outlay projects to free up additional money given falling oil prices and the economic impact of the novel coronavirus.
The governor vetoed $150 million in general fund spending that lawmakers had approved for public works and roads projects, money that will now go to the state’s reserves.
“We’ve got to be prepared as a state economically,” Lujan Grisham said Wednesday. “We want to make sure we have enough money in reserves.”
Among the cuts were capital outlay projects in House Bill 349 totaling $110 million, which represents about 20 percent of the spending approved in that bill, according to a message the governor sent to House members. Of that amount, $100 million had been earmarked as general fund spending.
The other approximately $50 million in vetoed general fund projects were in Senate Bill 232, a local road fund bill that Lujan Grisham rejected Monday.
“I have made the difficult decision to veto a number of projects that have merit, but must be vetoed in the interest of fiscal responsibility,” the governor wrote to legislators Wednesday. “I fully support efforts to improve the state’s infrastructure, but current economic conditions require me to veto several projects.”
Lujan Grisham said she did not veto capital outlay projects that address “critical public safety and public health needs.”
The budget signing came on the same day the governor declared a public health emergency after multiple New Mexicans tested positive for COVID-19. As of Wednesday night, New Mexico, which had been among a handful states without any positive coronavirus tests, had four cases.
Over the past several days, the governor and legislators have expressed concern about state revenue as oil prices have fallen dramatically amid the coronavirus pandemic and an oil price war between Saudi Arabia and Russia. The price of West Texas Intermediate crude oil was $33.34 on Wednesday.
Still, the vetoes were relatively minor compared to the overall amount of spending approved in the budget and capital outlay bills the governor signed Wednesday. House Bill 2, the main budget legislation, calls for a 7.5 percent increase in spending in fiscal year 2021, with over 45 percent of expenditures related to education.
The budget also includes pay increases of 4 percent for most state employees, including school teachers and workers.
“This is a structurally balanced budget,” said Olivia Padilla-Jackson, secretary of the Department of Finance and Administration, pointing out that estimated recurring revenue is higher than recurring expenditures. “This is an important point to us in terms of fiscal responsibility.”
Padilla-Jackson said the $150 million in capital outlay vetoes would allow the state’s operating reserve to rise to around $190 million, which can be accessed without needing legislative action.
However, she also pointed out that if oil prices were to stay around $30 per barrel for a period of months, the state could lose up to $500 million in projected revenue.
“We wouldn’t be able to sustain that for months,” she said, referring to oil at $30 per barrel.
State economists are studying different scenarios and their potential impact on revenue, she added.
Lujan Grisham said Wednesday that while she didn’t foresee the need for a special legislative session right now, she would be willing to have one if it became necessary.
The budget sets aside 25 percent in reserves. The majority of that money is in the state’s Tax Stabilization Reserve, most of which cannot be accessed without legislative action.
The governor also vetoed House Bill 45 on Wednesday, which was aimed at increasing employee and employer contribution rates to the state’s retiree health care fund. The governor said in a message to legislators that she vetoed the bill because it would have put “additional financial burdens on agencies without any accompanying appropriations.”
Many of the vetoed capital outlay projects were under $100,000 although there were some big ones, including $2.2 million for a new Magistrate Court building in Santa Fe and $2.5 million for the Indian Pueblo Cultural Center in Albuquerque.
The Department of Transportation lost dozens of new projects across the state that had been approved by the Legislature, as did the Aging and Long-Term Services Department.
Many of the projects removed from HB 349 were slated for Bernalillo County, although that county had by far the largest dollar amount originally approved for projects.
The International District in Albuquerque lost out on $505,000 for a new public library, and the state won’t be funding the Holocaust & Intolerance Museum in the city this year, either.
Taos County had money vetoed for a Frisbee disc golf course as well as a bronze statue to honor the late state Sen. Carlos Cisneros.
Projects in Santa Fe County that the governor vetoed include:
- $2.2 million for a new Magistrate Court building in Santa Fe.
- $1.47 million to build a dormitory and cafeteria at New Mexico School for the Arts.
- $1.46 million for a multiuse facility for Tesuque Pueblo.
- $858,000 for a Pueblo of Pojoaque wellness center.
- $440,000 for improvements to the National Dance Institute of New Mexico’s dance barn facility in Santa Fe.
- $300,000 for accessibility improvements at Santa Fe Children’s Museum.
- $250,000 for a community recreation center for San Ildefonso Pueblo.
- $212,000 for a file room at the Steve Herrera Judicial Complex.
- $100,000 for improvements to Cerro Gordo Road in Santa Fe.
- $50,000 for a Santa Fe business incubator.
- $50,000 to build an expansion to the Santa Fe Regional Airport terminal and infrastructure.
- $50,000 for improvements to the soccer valley complex in Santa Fe.
- $50,000 for the Vladem Contemporary art museum.
- $50,000 for the New Mexico History Museum.
- $40,000 for mats, clocks and furniture for a junior wrestling program.
- $10,000 for improvements to
- Santa Fe County Housing Authority sites.