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House accepts $5 billion state budget

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By Associated Press

With adjournment looming, the Legislature is sending to Gov. Susana Martinez a critical proposal for balancing the state's $5 billion state budget.

Lawmakers gave final approval late Thursday to a measure that saves nearly $111 million next year to help plug a budget gap. It requires state workers and educators to pay more into their pensions while government reduces its payroll contributions by a similar amount. The bill also will delay higher state payments to shore up the retirement fund for public school employees and college faculty.

Approval came after the House reversed course and accepted a Senate-passed version of the bill on a 35-34 vote. Nearly 24 hours earlier, the House turned down the proposal, creating uncertainty whether lawmakers could push through a package of budget-balancing legislation before the legislative session ends on Saturday.

Faced with the potential of a more than $100 million hole in the budget, the House reconsidered its earlier vote and decided to approve the measure.

"Let's share in the pain that we have to share. Let's balance this budget and send it to the governor for her action," said Rep. Luciano "Lucky" Varela, D-Santa Fe.

The pension proposal caused heartburn for members in both parties, but for different reasons. Democrats didn't like putting the budget-balancing burden on public employees. Republicans saw it as a stopgap fix to a structural imbalance between state spending and weak revenues.

One provision in the bill requires public employees and educators to pay an additional 1.75 percent of their salaries into their pensions next year, saving the state almost $50 million. A similar 1.5 percent pension swap was enacted in 2009 and the legislation will continue that for another year, saving nearly $43 million.

Republicans and the governor wanted to make the 1.5 percent pension permanent. Some Democrats didn't like a provision in the Senate-passed bill that will keep the 1.75 percent higher contributions in place for a second year unless projected state revenues increase significantly later this year.

Few people expect revenues to sharply rebound because the state's economy remains weak and natural gas prices are low. Oil and gas production is a big source of revenue for New Mexico.

The House originally had adopted the 1.75 percent pension swap as a one-year change.

Other parts of the Legislature's budget package are going to the governor:

• A $5.4 billion budget bill that will cut spending by 2.7 percent next year. It won final approval in the House on a 36-32 vote.

• A measure to cap film production subsidies at $50 million a year and spread out some rebates to film companies over three years. In taking those steps, lawmakers freed up $23 million that went into the budget to meet the governor's request to minimize cuts for education, health care and public safety programs. The House sent the bill to the governor by voting 51-17 to accept the Senate's version of the film subsidy limits.

Scott Darnell, a spokesman for the governor, said Martinez "is encouraged that the Legislature voted to trim the film subsidy."

The governor has until early April to decide whether to sign or veto the budget and other measures.