FGGAM NEWS just received this news release:
Governor Susana Martinez Introduces Fiscal Year 2018 Budget
Proposal Cuts Government Spending, Closes Deficit without Raising Taxes, and Protects Classroom Spending, Economic Development, and Public Safety
Albuquerque, NM — Today, Governor Susana Martinez announced her Fiscal Year 2018 budget proposal, which closes the current budget deficit caused by the oil and gas crash without raising taxes. At the same time, the proposal protects classroom spending, economic development initiatives, and public safety.
“This is a responsible budget that reduces the size of government while at the same time protects the progress we’ve made in diversifying our economy, reforming our education system, and keeps our communities safe,” said Governor Martinez. “This sends a message that it’s up to state government to tighten its own belt – not our hardworking families. Furthermore, this proposal will ensure that we have a strong, healthy savings account for the next oil and gas downturn or the next time the federal government fails us.”
The Governor’s $6.09 billion budget for FY18 maintains the cuts adopted by the Legislature in the 2016 Special Session. It also proposes cuts to agencies that weren’t as impacted during the Special Session, consolidates certain state agencies, modernizes and simplifies the tax code, and eliminates subsidies for counties that have already raised taxes. Prior to the 2016 Special Session, Governor Martinez ordered executive agencies under her authority to reduce their budgets in anticipation of a projected shortfall and proposed a series of measures to shore up reserves during the Special Session.
Last year, Governor Martinez called the Legislature into Special Session to address the revenue shortfall caused by the largest crash of oil prices in New Mexico history. However, lawmakers did not close out the potential for a shortfall in FY17 and left many options on the table.
Now, some lawmakers are discussing furloughs, layoffs, pay cuts, and tax hikes. But the Governor’s plan provides an alternative.
The FY 17 solvency package includes:
- Sweeping $268.5 million in various cash and fund balances from across state government, including a small portion – $12.5 million – of lawmakers’ vastly overfunded personal retirement accounts.
- That also includes $120 million in administration slush funds within our school districts that are not being used in the classrooms. This DOES NOT have an impact on classrooms. With the sweep, the fund will still have $132 million and would allow school districts to keep their reserves at 5 percent as currently directed.
- Reducing the gross receipts tax “hold harmless” distribution to those counties and municipalities that have already raised taxes on their citizens. This will save $9 million.
- Reducing budgets for the Legislature and Higher Education, from 3 percent and 5 percent respectively, to the 5.5 percent the majority of other agencies are having to deal with (total of $4 million recurring).
- To prevent state employee furloughs and salary reductions, the proposal includes a 3.5 percent retirement swap from state employer contribution to state employee contribution.
- The elimination of some credits and assessments paid by Medicaid to the New Mexico Health Exchange and New Mexico Medical Insurance Pool (total of $17 million recurring).
Had legislators adopted these and other proposals during the special session, we would not be facing a $67 million shortfall and -1.1 percent reserves for the current fiscal year (FY17). The State would have reserves of at least $158 million or 2.5 percent.
“Lawmakers avoided making tough choices, but we have some time now to work together on a budget that restrains spending, doesn’t raise taxes, and protects the progress we’ve made on education, economic development, and public safety,” Martinez said. “How we address this budget challenge will determine the future of New Mexico for generations. If we abandon our reforms, continue growing government, and look to taxpayers to bail us out, we should not expect the bright future that is within our grasp.”
A narrative summary of the proposal is available online here.