SANTA FE – New Mexico Gov. Susana Martinez signed into law a $6.2 billion state budget plan for the coming fiscal year that reins in spending and draws down reserves to cope with plummeting state revenues tied to low crude oil and natural gas prices.
The Republican governor said she used her line-item veto authority very sparingly after the Legislature shaved overall state spending and shifted money toward pay increases for prison guards, State Police and some teachers, while offsetting a surge in Medicaid health care costs. Lawmakers and the governor avoided tax increases by scouring agency accounts for one-time funding.
“The budget I am signing today does an admirable job of making targeted investments in key public safety efforts – like improving our ability to recruit and retain correctional officers and police officers,” Martinez wrote in a message to lawmakers accompanying her signature and line-item vetoes.
The state expects to spend nearly half of its operating reserves this year to make up for weak revenues linked mainly to energy prices and also weaker-than-expected income and sales-based taxes. General fund reserves that stood at $713 million in July 2015 are expected to drop to about $340 million by the end of June, according to the Legislature.
Operating budgets at most state agencies will shrink next, most dramatically at the Higher Education Department overseeing state colleges and universities.
Critics of the budget plan, and its reliance on reserves and account balances, worry that New Mexico will have little to fall back on next year if energy prices remain low.
Martinez vehemently opposed any tax increases, and the Legislature ultimately rejected the ideas of tax increases on tobacco products and gasoline and chose not to delay corporate income tax reductions. Another failed proposal would have put to a public vote more transfers from the state’s largest permanent fund toward public schools.
Martinez emphasized the state’s dire revenue outlook and vetoed provisions that she said could trigger across-the-board spending cuts if matters get worse next fiscal year.
“I believe the more responsible approach would be for the Legislature and executive to work together on more targeted plan to reduce spending – in some cases substantially – where it makes the most senses and has the least amount of harm to public health and safety,” she wrote.
Martinez also highlighted provisions in the approved budget designed to curb further increases in Medicaid spending.