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Demands fall due on big budget shortfall

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By Harold Morgan

With Gov. Bill Richardson following his usual management approach to tough matters – leave town – the Legislative Finance Committee gathered in Santa Fe Aug. 28 for the latest report on what might be done to maintain the solvency of state government.

The LFC got a first look at proposals to deal with the state’s shortfalls.

Right. That’s plural, meaning two budget years, the previous one and the current one.

Large, ugly numbers floated. The governor was in Malaysia, speaking at a Forbes conference exactly overlapping the LFC meeting.  Good timing.

The official math: $454 million plus $113 million. The $454 million has been the “negotiating number” for the current budget year, FY10, that ends June 30, Finance and Administration Secretary Katherine Miller, told the LFC. The $113 million is the amount needed to pay the bills for FY09, which ended more than 90 days ago. Closing the books used to take 60 days, says a former state budget official.

Now it gets interesting.

The FY10 number may be $550 million, said Sen. John Arthur Smith, D-Deming, at the LFC hearing. Then, just three days later, Senate Pro Tem Tim Jennings, D-Roswell, suggests the FY10 shortfall may be $700 million. The figure was mentioned in a long “Open Letter to the Citizens of New Mexico.” The letter is posted at: http://roundhouseroundup.blogspot.com.

Further – and amazingly to me – the state is not sure how much more money it needs to pay the FY09 bills. It might be $113 million. It might be twice that or $226 million.

Images of the Merrill Lynch financial meltdown come to mind. So does Enron, with mention of clever financial options such as “sponge bonds.”  

The ever-practical Smith wants to cut enough from the current year  spending – $550 million, he says – and/or find money to plug gaps so as to be reasonably sure of not having to revisit FY10 during the 2010 legislative session. For now, the House, the Senate and the administration don’t agree on what to do.

All this is not new, I was told in Santa Fe. Maybe. But unless one is in the Group of 12 budget negotiators or in the slightly larger cocoon around the group, it’s probably news.

We return again to the question of what to do, specifically.

The governor’s attitude about education is delusional. “The governor really feels very strongly about not cutting education,” Miller said.

But education is where the money is. And the money, everywhere in government, is pretty much in people.

The good news is that government managers are rational, according to my informal survey.

They aren’t waiting. Implementing cuts now, though difficult, will be easier than cutting the same dollar amount later.

In higher education, non-tenured people should be updating their resumes. Fewer classes will be offered.

In public education, educational assistants may be a target; in larger systems, middle management. There is a job called “instructional coach.” Teachers are disappearing, a parent tells me.

Opportunities abound. The Department of Game and Fish and the State Parks Division spend around $40,000 per issue on New Mexico Wildlife, a quarterly full-color public relations publication.

There is the recent $450,000 ecotourism planning contract.

The state wants to hire more people. Among positions with “an exemption to the state of New Mexico hiring freeze,” the personnel office Web site says, is a “janitor and cleaner” job at Fort Bayard and an “IT business analyst” at the engineers board.

The problem will remain. The big majority of immediate actions will be one-time moves. The longer term solution must come from making different choices about spending the continuing income called “recurring revenue.”

It’s time to reset state government.

© 2009 New Mexico News Services