Outstanding BLM payment complicates state’s budget troubles

A statue outside the Roundhouse in Santa Fe.

Heath Haussamen / NMPolitics.net

A statue outside the Roundhouse in Santa Fe.

The state’s efforts to end its current fiscal year in the black are being complicated by a $69.9 million payment from the U.S. Bureau of Land Management that is delayed by protests of lease agreements.

The most recent analysis projects the state will end the current fiscal year on June 30 with $102 million in the bank — and that analysis is fluid. Another estimate from less than a month ago projected an ending balance of $77 million. “The margin of error is slim,” state Treasurer Tim Eichenberg has said.

The estimates are dependent on the money due from the BLM for oil and gas lease sales near Roswell. A BLM official told NMPolitics.net the $69.9 million is likely to come in time to pay the state’s fiscal year 2017 bills — but not certain.

BLM spokeswoman Donna Hummel said two environmental groups — Wild Earth Guardians and the Center for Biological Diversity — formally protested all parcels in the BLM’s Sep. 4 lease sale. That triggered a formal review process that has yet to be completed. Until it is, there’s no certainty the leases will be finalized, or that the money the state is due because of those leases will come in.

On Friday, the BLM completed its environmental assessments of the protests. There are “a couple more layers of review” by other federal agencies, but right now it looks as though the leases will be finalized and the state will receive its money by June, Hummel said.

“We feel confident, now that our review is finally complete, that the state will have the lease payment prior to the end of their fiscal year,” Hummel said. “… We do take protests very seriously and we don’t try to make any assumptions, but in this case it does look to be good news for the state’s budget.”

Though the state’s fiscal year ends on June 30, the payments could come a couple of months later and be used to pay outstanding bills.

Still, the uncertainty is causing concern in the final months of the fiscal year. Lawmakers have already twice met to make cuts and sweep funds to help balance the state’s current fiscal year budget, which has been plagued by falling oil and gas prices. Gov. Susana Martinez has implemented a hiring freeze and is threatening furloughs and closing state parks, among other measures, to conserve cash.

There’s lots of disagreement about whether Martinez’s actions are necessary, but officials agree the situation is serious with the state’s cash reserves projected to be at effectively zero by the end of the fiscal year. The state is constitutionally required have a balanced budget, and there’s little room for error.

Beyond that, the state needs money in reserves to protect its credit rating and keep the costs of borrowing money for infrastructure projects from rising.

U.S. Rep. Steve Pearce, R-N.M., sparked a bit of concern on Friday when he tweeted about the delayed BLM payment to the state. “Informed today that BLM is forced to hold $69 million for NM schools, hospitals, & roads due to frivolous environmental lawsuits,” Pearce tweeted.

“We are hearing this could extend into the next fiscal year, causing the state general fund reserves to drop to unprecedented low levels,” Pearce spokesman Keeley Christensen told NMPolitics.net.

A spokesman for Martinez said he wasn’t aware of the situation mentioned in the Pearce tweet.

Two budget experts in the state Legislature sent a letter to Pearce and other members of New Mexico’s congressional delegation in Washington, D.C. on March 28 expressing concern about the situation. They wrote that delaying the BLM payment beyond the end of the current fiscal year could have a “significant, detrimental impact” on the state’s ability to pay its bills and bond rating.

“Delayed receipt of these funds would reduce projected Fiscal Year 2017 ending reserves to $25.3 million, or 0.4 percent of appropriations,” wrote Sen. John Arthur Smith, D-Deming, and Rep. Patricia Lundstrom, D-Gallup. “Due to the recent significant volatility in New Mexico’s revenues and uncertainty regarding economic conditions, 0.4 percent reserves in an unacceptably slim margin.”

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