SANTA FE – Gov. Susana Martinez signed off Monday on a $6.2 billion spending plan for the coming budget year that relies on one-time fixes, such as diverting money from government accounts and drawing down the state’s cash reserves, to avoid steep budget cuts.
But even with the budgetary tourniquets, overall New Mexico state spending is set to decrease next year for the first time in five years as plummeting oil and natural gas prices take their toll on the state’s economy.
“Things aren’t going to be easy, but I’m optimistic we can make it through,” Martinez said at an Albuquerque luncheon, where she announced she had signed the budget bill for the fiscal year that starts in July.
The second-term Republican governor used her line-item veto authority to ax about $1.8 million in proposed spending from the budget, though much of that money was tied to bills that failed to pass during the 30-day legislative session that ended Feb. 18.
The governor also line-item vetoed some budget language, including a provision calling for additional, automatic spending cuts of up to $62 million if revenue levels continue to sag in the coming year.
Sen. John Arthur Smith, D-Deming, the chairman of the Senate Finance Committee, said the line-item veto means lawmakers will have to return to Santa Fe if plunging energy prices keep stifling the state’s tax collections.
“If the revenues do materialize, we’re fine,” Smith told the Journal . “If not, we’re in special session.”
In response to the worsening budget situation, the Martinez administration has said it is limiting nonessential spending, partly by cutting back on state employee travel across all agencies.
But the governor said Monday that New Mexico is faring better than other energy-dependent states. North Dakota, for instance, is bracing for deep cuts to government agencies in response to a $1 billion budget shortfall.
“I believe this can be managed through wise budgeting and spending restraint,” Martinez told the crowd of several hundred business leaders at the luncheon hosted by NAIOP, a commercial real estate development organization.
The budget bill signed Monday will provide salary increases for State Police, corrections officers at state-run prisons and some veteran teachers. But most rank-and-file state workers will not receive raises.
While Medicaid spending will increase by roughly $20.8 million, the increased dollar amount is not expected to be enough to keep up with skyrocketing enrollment growth for the joint federal-state health care program. That will mean a cut in provider rates for doctors and hospitals.
Meanwhile, funding for state colleges and universities will be slashed by $19.6 million under the spending plan, and other agencies will also face cuts.
Martinez signed the annual budget bill Monday – more than a week before her March 9 deadline for taking action on bills – so that monthly spending allotments for state agencies can be reduced for the final four months of the current budget year. That move is expected to save the state about $31 million.
The governor also signed a separate bill that takes nearly $130 million from various government accounts, mostly for the coming budget year, to help bolster spending and reduce the need for deeper cuts.
Senate Finance Chairman Smith said he’s concerned about the ripple effects of the falling oil and gas prices on other sectors of the economy, and pointed out it might be harder to come up with more one-time fixes next year.
“We’ve dusted out a lot of corners,” he said.