Senate passes bills to address budget shortfall, then goes home

The New Mexico Senate abandoned efforts to work out a deal with the House and governor to address the state’s budget woes, instead approving its own fiscal plan before quitting work early Saturday.

A statue outside the Roundhouse in Santa Fe.

Heath Haussamen / NMPolitics.net

A statue outside the Roundhouse in Santa Fe.

By adjourning sine die, senators formally declared their work during the special session done. The Senate left unheard three crime bills Gov. Susana Martinez pushed that many Democrats said were politically motivated.

Senate Republicans didn’t want to adjourn without considering the crime bills, but they’re the minority in the chamber. All Democrats voted to go home.

Just before the Senate adjourned around 12:20 a.m. on Saturday — 12 hours after the session began — Minority Leader Stuart Ingle, R-Portales, said he wished the Senate would have considered the crime bills. “But the Senate did work together today, and that is the important thing,” he said.

Senate Democrats refused to address anything but the state’s budget shortfall — which was $130 million in the fiscal year that ended June 30 and estimated to be another $458 million in the current fiscal year. The budget bills approved by the Senate add up to $423 million, so they don’t quite plug the hole in the budget that is caused primarily by falling oil and gas prices.

Nonetheless, senators celebrated their work.

“Senate tonight resolved State’s largest structural deficit,” Sen. Joseph Cervantes, D-Las Cruces, tweeted as the Senate was passing budget bills. “So impressed with colleagues who put together this plan,” he wrote in another tweet.

The governor’s office wasn’t pleased.

“Senate sine die after not solving a thing & leaving victims’ families without justice,” Deputy Chief of Staff Nick Piatek tweeted. Communications Director Christopher Sanchez tweeted that the Senate’s move was “unbelievable.”

What happens next isn’t clear. None of the Senate’s bills can be enacted without approval from the House and governor. The House can attempt to bring senators back to work if it stays in session until Wednesday.

The details

The Senate’s budget fix came in the form of about a dozen complicated bills that would take money from the state’s $219 million Tobacco Permanent Fund, make widespread cuts, sweep funds from various accounts, defund certain capital outlay projects, freeze corporate tax cuts approved in 2013, and reduce payments to cities and counties, among other things.

The governor and House members have also expressed support for using the money from a settlement with tobacco companies to help address the budget shortfall. But reaching agreement on how to come up with hundreds of millions of additional dollars, even after more than two months of negotiations, has been difficult. The governor has insisted she won’t back any bills to raise taxes.

The Senate approved most of its budget bills easily with bipartisan support. But legislation to freeze corporate tax cuts narrowly passed the Senate on a 21-20 vote. The House won’t likely pass that bill.

Senators voted to cut most state agencies’ funding by 5 percent, with some exceptions. The judiciary would see a 3 percent cut. Some funding for health-related agencies would be cut by 2.5 percent. Some law-enforcement and other agencies would see 1.5 percent cuts. A few areas wouldn’t be cut at all.

Senators ignored a plea from New Mexico State University, given the $32 million in cuts it’s made in recent years, to consider higher-education funding school-by-school rather than imposing an across-the-board cut.

Higher education would be cut by 5 percent across the board under the Senate’s plan — which amounts to a reduction of about $10 million for NMSU.

School district sweeps

Another issue that was contentious during negotiations was a plan to take money from public school district’s cash balances — funds some of those districts might have used to soften the blow of state cuts. The proposal initially would have calculated sweeps based on the size of a district’s reserves. Some districts complained they would be unfairly penalized for having saved money.

Friday afternoon, Las Cruces Public Schools spokeswoman Jo Galván told NMPolitics.net the district had $8.4 million in its reserves, and needed that money to pay expenses such as insurance until federal reimbursements came in. The reserves also cover contingencies like increased utility costs in an unusually cold winter.

“The state’s budgetary cuts should not be on the backs of teachers or the classrooms,” LCPS Interim Superintendent Steven Sanchez said.

Former LCPS Superintendent Stan Rounds led negotiations on behalf of the state’s school districts, and the deal eventually approved by senators calculates sweeps based on district enrollment rather than the size of cash balances.

After the deal was reached, Sen. Bill Soules, a Las Cruces Democrat who chairs the Education Committee, told NMPolitics.net the bills approved by the Senate would cut K-12 funding by about $100 million — including sweeping $25 million from cash balances.

Some said the school district sweeps are painful but necessary. Sen. Mimi Stewart, D-Albuquerque, said during debate on that bill that districts are “giving money that they can’t afford to give.”

“I’m going to vote for this bill. I don’t like it. I was part of the process that made it much better,” she said.

Less money for cities and counties

The Senate also voted to accelerate the Legislature’s phasing out of funds for cities and counties. In 2013 the state approved a 15-year phase out of the so-called “hold harmless” payments — money to help cities and counties make up for revenue lost when the state stopped taxing sales of groceries and medicine in 2005.

The City of Las Cruces estimated in 2013 that the phase-out of those payments would cost it $8.5 million annually. In response, the Las Cruces City Council approved a 3/8 of 1 percent increase in the gross receipts tax.

Late Friday, Las Cruces Mayor Pro Tem Gregory Z. Smith said the accelerated reduction in hold-harmless payments, if enacted, would be painful, “but it could always be worse.”

“Our legislators are doing what they feel they must do,” Smith said. “I still believe we did what we had to do under the circumstances when we voted for the 3/8 percent increase.”

‘We absolutely had no other option’

Soules told NMPolitics.net he was pleased with the Senate’s work to address the budget shortfall. Lawmakers can consider the crime bills in the regular session that starts in January, he pointed out.

“The 60-day session will allow full debate on the important social issues,” he said. “…The budget is the immediate problem that must be dealt with, and we dealt with it responsibly.”

As the Senate prepared to adjourn, Majority Leader Michael Sanchez, D-Belen, praised his colleagues.

“We’ve really worked hard to fix this crisis that we’re in. It’s not perfect,” he said, adding that there will be more to do during next year’s regular session.

Sen. John Arthur Smith, a Deming Democrat who chairs the Finance Committee, added that he hopes the price of oil and gas rebounds “quicker than what it probably will.”

“I do believe that we’ve done the best for the State of New Mexico given the conditions of our economy right now,” Smith said. “We absolutely had no other option with the way we handled this.”

This BBSNews article was syndicated from NMPolitics.net, and written by Heath Haussamen, NMPolitics.net. Read the original article here.