All options must be on the table when it comes to repairing the battered New Mexico state budget.

Between now and some unknown date in June when a special legislative session will take place, the leaders of New Mexico government are charged with finding a way both to reduce spending and to plug holes in the annual budget.

Revenues for the budget year that begins July 1 were expected to come in around $7.9 billion, with the budget set at $7.6 billion. Instead, the state could bring in from $5.5 billion to $6.1 billion, depending on the estimate. That’s a drop of 30 percent amid a financial picture that does not promise to improve anytime soon.

Even though the state must slash spending, it is essential that Gov. Michelle Lujan Grisham and legislative leaders do so strategically. The budget put together with such optimism earlier this year was not one of reckless spending. It was dedicated to investments in New Mexico’s future, whether by putting $320 million in an early childhood trust fund or setting aside $180 million for much-needed road repairs.

Such efforts must not be completely undone.

Otherwise, New Mexico will balance its budget now while restricting future opportunity. The temporary golden period when the oil and gas boom brought in tens of millions in new revenues offered the state a singular moment to improve longstanding deficiencies — boosting education spending, investing in job growth and establishing a foundation for early childhood care that would lift generations out of poverty.

This economic crash, courtesy of the COVID-19 pandemic that has shuttered business activity and the deep plunge in the price of a barrel of oil, cannot be allowed to overshadow this moment.

First, of course, Lujan Grisham has to call a special session, sharing her plans for the budget well in advance. Even setting a date and procedures is complicated in this age of COVID. Large gatherings are banned because they are an opportunity to spread the novel coronavirus that causes COVID-19. The House of Representatives is considering a short gathering to allow approval of its body to meet virtually; the Senate, on the other hand, believes its smaller group can meet safely using protective gear and social-distancing measures.

Obviously, there will be cuts in spending. That is a given. Fortunately, money was set aside for bad times. The state reserve fund has some $1.9 billion in it; a portion of that will be spent to make up the deficit.

Federal relief dollars sent to states because of the pandemic should help, too, and more could be on the way. We encourage Congress and the Trump administration to give states maximum flexibility to use that money as states deem best. Already, New Mexico has received more than $1 billion from the March stimulus package approved by Congress. Those funds are targeted for costs related to the coronavirus, but those restrictions can — and should — be lifted.

The big fight ahead will focus on whether the state should use the vast resources of the Land Grant Permanent Fund to boost the budget — currently the distribution is 5 percent, but that can be increased if voters approve. Fiscal hawks shudder when that is proposed, preferring to cut their way to solvency. While we respect the more prudent spenders in the Legislature, including Senate Finance Committee Chairman John Arthur Smith, the Land Grant Permanent Fund was established not just for rainy days but as a backstop in true times of trouble.

It makes little sense to keep billions in the bank if the state cannot pay necessary operating expenses now and invest for a better future. A temporary increase in the distribution, meaningful cuts in both one-time and recurring spending and use of reserves all could be necessary to navigate New Mexico through this crisis.

And, yes, look for new revenues.

Bring back the proposed tax increase for gasoline during the regular session in January, dedicating revenues to road infrastructure. New Mexico has one of the lowest gas taxes in the nation, and with the price of gasoline at its lowest point in years, adding 10 cents won’t cause the pain it might have when gas prices were soaring.

The issue of legalizing recreational marijuana needs to be revisited — tens of millions in additional yearly revenue would be welcome right now. So would an industry that is not boom or bust in nature. That’s true for the state’s expanding film industry as well. Current film and television subsidies might prove too rich in our current budget reality; still, the state must diversify its economic base and movies are a big part of that picture.

Lt. Gov. Howie Morales, as a state senator, proposed a hefty increase on the tax on cigarettes, both as an incentive to slow smoking and as a way to bring in more money. That’s another way to add to the revenue stream while potentially decreasing health costs. There’s much to consider, both in cutting spending and growing revenues.

First, the governor must set a date for the special legislative session while Senate and House leaders figure out how to meet safely without spreading contagion — we anticipate stations for visitors and legislators to have their temperatures taken before entering the building, for example, and masks required of everyone. The Legislature can establish rules to meet virtually, too. Flexibility would be useful considering this virus isn’t going away. Then, balance the budget, the first step on the road to improving New Mexico’s future. But cuts cannot be the only way out of this fix. Otherwise, our current fiscal pain will doom the state to a bleak future.

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(8) comments

Tim Long

Maybe it's time to implement the recreational cannabis program during the special session to help provide needed resources. It seems like the only time anything gets done is when the bottom line is involved.

Maxwell Vertical

Roll back all of the spending increases from the last legislative session. Before, that’s done there’s nothing to discuss. Raiding the Land Grant Permanent Fund is a non-starter because there will never be enough votes for a constitutional amendment.

Dr. Michael Johnson

Maybe Mich can talk to Elon.........if she opens us up....."Musk threatens to move Tesla operations as company sues California county

UPI 9 May 2020

May 9 (UPI) — Tesla filed a lawsuit Saturday against Alameda County, Calif., where its factories are located, over ongoing restrictions due to the COVID-19 pandemic, and CEO Elon Musk threatened to move the company’s headquarters and operations out of California.

Musk wanted to resume vehicle production at Tesla’s Fremont, Calif., factory Friday afternoon, but Alameda County’s interim public health officer said the company is not yet authorized to do so as health orders to contain a coronavirus outbreak in the region are still intact."

Joseph Tafoya

One thing you can take to the bank. The Guv and the Democratic legislature are going to futilely try to tax us back into prosperity. Of course they can always blame President Trump which they plan to do anyway.

George Welland

One crisis at a time please... let the governor finishing saving lives, before the partisan, selfish (as in lobbyist controlled), and less than revered politicians in the legislature scramble to save their pork barrel projects and corporate welfare while burdening taxpayers as they claim they're cutting government in our best interests ?

The SFNM is right to opine that cuts alone won't get the state out of debt and enumerating legalizing (and taxing) recreational marijuana and increasing other sin taxes are among the obvious solutions.

If there's money in the state's permanent fund it ought to be tapped also (maybe with strings attached to replenish it).

Additionally, the governor should consider ordering her labor secretary to get those unemployment insurance (UI) checks out. Curse the business lobbyists who think payroll taxes, they've artificially held low for decades, aren't going to increase! Unfortunately the state UI program has been designed (through lobbyists influencing legislation) to be slow and complex, and NOT pay jobless benefit, but to keep payroll taxes low. Under staffing or old computer systems are not holding up checks, as some would like to have the unemployed believe, it's because emergency regulations have not been promulgated to remove cumbersome disqualification and "re-qualification" provisions and get those $600.00 per week federal benefits paid. Again, the reason regular state UI (the small portion of weekly benefits prerequisite to getting the federal $600.00 bonus) is not being paid, is because: Business lobbyists fear that increased regular state UI payments will increase UI payroll taxes; but will make specious argument about unacceptable welfare costs to enrich the idle poor; which, even if it was true, is like worrying about souvenir menus for the first class passengers in the lifeboats on the Titanic (the delay will sink us all)!

Dr. Michael Johnson

So first the Guv, unnecessarily and illogically, takes a meat axe to the NM economy by targeting all the small businesses for destruction, now she wants to raid the Permanent Fund to pay for her arbitrary and capricious decisions. And of course whatever cuts there are, her special interests will be rewarded so she can survive the next election when the people so badly harmed by all this are looking for the person who was in charge to fire.

Joseph Tafoya

You nailed it.

Norma Evens

Everyone thinks that everything is on the table but in 1956 the State tried to sure up its budget using the the Land Grant Permanent Fund, the courts thought otherwise and ordered the State had to return the money.

Welcome to the discussion.

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