Governor's budget calls for 'year of restraint'

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By Roger Snodgrass

SANTA FE – Capital expenditures and educational budgets will take the brunt in the governor’s proposed spending reductions for next year, which he has dubbed “the year of restraint.”


Anticipating the 60-day session that begins next week, Gov. Richardson said New Mexico is in “great shape,” despite the recession.


But targeted cuts, including some stingers, will be needed and savings must be found to make ends meet. He credited the state’s high level of cash reserves for providing a margin of resilience.


Elsewhere in the country the global recession is taking a toll, he said during a press conference at the capitol Monday, in which he sketched his plan for making up a projected $450 million discrepancy between revenues and expenses for the remainder of this year and an even gloomier prospect next year.


The National Conference of State Legislatures estimated in its State Budget Update issued last month that altogether the states will have to close a $97 billion budget gap over the next 18 to 24 months.


“New Mexico is in good shape to deal with tough times,” he said. “Because we’ve been fiscally responsible, we’re well positioned to deal with the global recession.”


Compared to other states, New Mexico looks relatively good to the governor, who will spare the axe, but he is proposing several of what he called “responsible” belt-tightening measures.


In view of a nearly $700 million revenue shortfall over the next two fiscal years, Richardson said most of the reductions will come from 2-5 percent spending reductions, totaling $56.5 million that has been identified in executive agencies for the remainder of this year and double that for all of next year.


That includes $43.8 million, about evenly divided between public and higher education this year, but swelling to four times that next year – $165 million for public education and 40.6 million for higher education.


Spending for capital projects will be reduced by “de-authorizing” $263 million-worth of projects, a proposal that will require legislative cooperation.


Rep. Jeannette Wallace, R-Los Alamos, Sandoval and Santa Fe, who serves on both the finance and the appropriations committees took issues said some educational cuts would be necessary because so much of the budget is school-related.


But she disagreed with the governor’s concept of “de-authorization.”


“What we have looked at is that after you fund an entity, they have several years to get their act together, before the come before us for reauthorization,” she said. “That’s more what we were looking at, rather than taking it away.”


The other problem on capital outlays comes from the executive encroachment on what used to be shared funding process in which the executive, and the two houses of the legislature each had one-third of the available funds to spend.


“But this governor wanted half,” Wallace said. “And then one-third of the remaining half, so now it’s hitting us again.”


The governor also expects to come up with an extra $79 million in tax revenue through acceleration and collections, although he plans to invest $75 million in new technology to do that, picking up a mere $4 million for the rest of this year and $34 million next year.


His main message was, “My budget plan does not increase taxes; leaves essential services for New Mexico intact; and keeps substantial and responsible cash reserves to protect us against further shortfalls.”


The finance committee is meeting this week and is expected to approve a similar proposal, but with some differences.