Who hid the deficit?

-A A +A

Much of gap is loss of stimulus funds

What did I tell you? My column written for Oct. 4, announced a $450 million budget deficit. At the time, the Legislature was predicting a $260 million deficit.
No, I wasn’t part of Gov. Bill Richardson’s “hide the ball” conspiracy that Gov.-Elect Susana Martinez alleges.
My not-so-secret information came from watching the ebb and flow of  deficit projections during the past two years.
Even one year ago, Martinez was still chasing drug cartels and her advisers were still back in Washington, D.C. So how were they to know?
Each year, the Legislature’s economists have made a deficit projection in September. In early November, the governor’s economists make their own projection, which has been higher.
Later in November, finance people from the governor’s and Legislature’s staffs have analyzed each other’s fiscal assumptions and reached agreement on a mutually acceptable figure.
That figure typically has been a little higher than either had previously projected.
Some Republican legislative leaders currently are tossing around a $500 million figure. In case you didn’t save a copy of my Oct. 4 column, that was my final guess.
Why the difference between the two projections? That has been explained in the newspapers for a week now but Gov.-Elect Susana Martinez’s newly-announced finance secretary     is still repeating her line about it being a Richardson conspiracy.
According to newspaper reports, the legislative analysts assumed that one-time or temporary laws enacted in the last two years will be re-enacted by the 2011 Legislature. The governor’s staff didn’t make those presumptions. The difference was about $90 million.
A large part of the $90 million was a reduction in the amount of government contribution to retirement benefits for state and local government employees.
The employees picked up the difference but were told it would only be for two years. The two years are up. The last time, unions demonstrated and sued — unsuccessfully.
Another change between the deficit projections was a further growth in spending for Medicaid as more unemployed applied for coverage.
Another factor is the rising costs of insurance, utilities and other budget items. The legislative figure presumes agencies will absorb those costs in budgets that already have been cut significantly.
New Mexico is one of a few states in which the legislature also prepares budget estimates. It has been regarded as a strength. But in today’s polarized politics, it is causing further distrust in government.
Our new governor couldn’t be stepping into her office at a much tougher time. She is inheriting a budget mess and has only two months to develop a plan for next year.
She evidently didn’t have anyone studying budget figures during her campaign. She made only vague references to the budget and alleged the governor was hiding it from her.
Actually the budget was passed last February by the Legislature and signed with partial vetoes by Gov. Richardson early last March. It is a public document available on the Internet.
It is time for the governor’s office to give Martinez’s new finance secretary Richard May the thorough budget briefing it says it has offered.
The Legislative Finance Committee will be making its final budget recommendations in early December and the governor must submit a budget document to the Legislature by opening day, Jan. 18.
Much of the budget deficit is due to the loss of any further federal stimulus money, much of which has gone to public schools and Medicaid.
Governors also get a big chunk of stimulus to use at their discretion to provide for special needs. That money runs out on June 30.
To be fair about it, an outgoing governor would spend half of it and leave the other half to be distributed by the new governor in the second half of the fiscal year. Gov. Richardson has been on a spending spree of late.

Jay Miller insidethe