NM House narrowly approves $5 billion state budget

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By Barry Massey

SANTA FE, N.M. (AP) — The House narrowly approved a proposed budget on Wednesday that cuts state spending by nearly 3 percent next year and uses savings from public employee pensions and film subsidies to balance the financing blueprint for public education and government programs.

The measure allocates $5.4 billion in the fiscal year starting July 1. That's about $155 million or 2.8 percent less than this year, when New Mexico used nearly $380 million in federal economic stimulus money for health care and education. The federal aid has disappeared, forcing lawmakers to trim spending to balance spending and anticipated revenues next year.

"We did the best we could with the available revenue we had," said Rep. Henry Kiki Saavedra, an Albuquerque Democrat and chairman of the Appropriations and Finance Committee.

The proposed budget is about $18 million lower than spending recommendations by Republican Gov. Susana Martinez.

Lawmakers did not rely on tax increases in the budget but they assumed about $110 million in savings from pension fund changes and $25 million in extra revenue next year by capping subsidies for film production in the state. Separate legislation must be enacted to implement those changes.

About $49 million will be saved by requiring public employees to pay an extra 1.75 percent into their pension programs while the state reduces its payments by a similar amount. The state did a similar 1.5 percent pension swap two years ago and the budget assumes that will be continued next year, saving $42 million. The budget also factors in savings of up to $19 million from the state continuing to postpone pension contribution increases that were mandated by a 2005 law to shore up an educational retirement program.

The pension swaps reduce the take-home pay of workers but lawmakers contend the new 1.75 percent contribution increase for state workers and educators will be offset by a 2 percent cut in federal Social Security taxes this year. Lawmakers contend the proposal will prevent furloughs or layoffs of workers.

Education accounts for the largest share of the budget — about $2.4 billion for school operations, the Public Education and other programs such as pre-kindergarten. That's a reduction of not quite 1.4 percent from this year's funding. The proposed spending for schools is less than $2 million below what the governor had recommended in her budget submitted to the Legislature.

The spending measure was approved on a 35-34 vote and sent to the Senate.

Other provisions of the budget:

— About $729 million for the state's network of colleges and universities, a reduction of about 4 percent. The proposal trimmed state aid by $14 million, assuming higher student tuition could make up that amount.

— About $979 million for Medicaid, including services for the developmentally disabled. That's an increase of about 1.5 percent. Medicaid provides health care to more than 500,000 low-income New Mexicans and children without health insurance. About $10 million is provided for Medicaid to cover a shortfall in the current budget year.