Democracy for New Mexico

Op-Ed by Fred Nathan, Think New Mexico: Veto the Food Tax, Gov. Richardson

This is an op-ed by Fred Nathan, Executive Director of Think New Mexico.

Many New Mexicans are asking whether Governor Bill Richardson will line-item veto the reimposition of the local portion of the food tax that was passed during the recent Special Session.

However, once they learn the story behind the food tax’s passage, New Mexicans are more likely to ask instead: “Why wouldn’t Governor Richardson veto the food tax?”

First, a little recent history. In 2004, Governor Richardson, delivering on a campaign promise made in his 2002 election, boldly pushed a repeal of the food tax through the Legislature with the critical help of Speaker Ben Lujan and many others.

At the time, Governor Richardson pointed out: “the gross receipts tax on the food that goes on the plates of New Mexico families is an unconscionable reach into the pockets of New Mexico breadwinners.”

Indeed, this was an important victory for working low and middle-income families in New Mexico, who had been paying this regressive, anti-family tax since 1933 when it was enacted as a “temporary” and “emergency” statute.

So it was not surprising that Governor Richardson, in his State of the State address to the Legislature at the beginning of the regular session this January, made it clear that he would not support reimposing the food tax: “We cannot ask working New Mexicans to pay more for groceries when too many are struggling to make ends meet.”

This was a sensible position to take at a time when tens of thousands of New Mexicans are newly jobless and many more are living paycheck to paycheck.

Nevertheless, about three weeks later, some in the New Mexico Senate concocted and passed the infamous “tortilla tax” by a vote of 23-19. This tax actually went well beyond tortillas to hit food staples including rice, canned soup, spaghetti, nuts, honey, eggs, potatoes and yogurt. Thankfully, a House committee killed it 9-0.

In between the regular session and the special session, Governor Richardson worked hard to forge a compromise that would address the budget deficit. He said that while he was still opposed to the food tax, he was open to signing a junk food tax on sugary soft drinks and candy. This tax would generate approximately $22.4 million annually while helping to lower New Mexico’s soaring obesity and diabetes’ rates and reduce health care costs for these illnesses.

In the special session, rather than accept the Governor’s reasonable offer to tax junk food, some in the Legislature chose instead to tax fruits, vegetables and baby food, among other things. The food tax is included in the tax package that now sits on the Governor’s desk awaiting his signature or a line-item veto.

Governor Richardson has many good reasons to line-item veto the food tax. First, reimposing a $68 million food tax will serve as an anti-stimulus, draining dollars out of New Mexico’s fragile economy and harming local businesses. The money that families will be forced to spend on the food tax is money that they would otherwise be able to spend on other goods and services.

Second, for the same reason, the food tax will not close the budget deficit or avert the need for another special session. Revenue estimates for the food tax (and the budget itself) are too optimistic because they assume that New Mexico consumers will not change their buying patterns even though they will have less discretionary income thanks to the food tax. In the real world, less spending on non-food goods and services means lower gross receipts tax collections, something which is not accounted for in the estimates.

Third, there are far better alternatives for balancing New Mexico’s budget. The legislature could reduce state spending without cutting vital public services, as some fear. For example, a bipartisan task force created by Governor Richardson and headed by former Governor Garrey Carruthers recently recommended merging some state departments and eliminating a number of inactive boards and commissions.

Similarly, if the goal of this tax package is to “spread the pain” as broadly as possible, why was the liquor lobby spared from any increase in taxes on alcohol, which unlike fruits, vegetables and baby food, is a luxury?

We can do better than taxing food. Governor Richardson has said that he “hates the food tax.” So do the vast majority of New Mexicans, but only Governor Richardson can veto it. Now is his opportunity to cement his legacy and keep New Mexicans’ food tax free.

This is a guest blog by Fred Nathan, Executive Director of Think New Mexico, an independent, results-oriented think tank serving New Mexicans. To learn more about the food tax or to contact the Governor, please go to: www.thinknewmexico.org.

To submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link at the upper left-hand corner of the page. 


Lt. Gov. Diane Denish Issues Statement on Budget Cuts

New Mexico Lt. Governor Diane Denish released the following statement this afternoon in response to budget actions taken yesterday by Governor Bill Richardson on the legislation passed at last month's special session of the Legislature:

"The national recession has hit New Mexico hard and difficult times require difficult decisions to be made. Unfortunately, the cuts announced by the Governor are less than those passed by the legislature. This means we have yet to find the savings needed to balance our budget.

“Eliminating 84 exempt positions is a good start, but we must take a hard look at each appointed government position to make certain the position is providing value to the taxpayer.

“Instead of cutting Medicaid, I believe we could have done more to make our government agencies leaner and more efficient across the board. I’m concerned that by making cuts to Medicaid, vulnerable New Mexicans will suffer and the state will be forced to turn away much needed federal matching funds.

"I do believe we should eliminate $150 million in special pork projects because it was an important step toward balancing the current budget. But the state's long-term budget problems have not been solved. Considerable work must be done in order to ensure our state's long-term fiscal health, and many of the budget cuts enacted are one time funds that will not be able to be reduced further.

"During the next legislative session we will again face difficult decisions. But before we start a debate about tax increases or cuts to education, we must get serious about financial reforms. That means overhauling the state's capital outlay process, ending the practice of "double-dipping" and better using technology to streamline government operations. Taken together, these reforms will save the state millions of dollars, generate economic activity in both the short term and long term, and provide greater accountability to the public for how their tax dollars are spent.

"Just as all businesses and families do during tough times, government simply must find ways to stretch dollars further. And together, we must do it in a way consistent with our priorities and our values."

Gov. Bill Richardson Releases Executive Order and Info on Budget Bill Actions

Here's the material released today by the Governor's office on Governor Bill Richardson's actions related to the state budget, including a press release, a list of bills approved or vetoed in part or in full, an executive order and messages to the New Mexico House (HB 17) and Senate (SB 29):

Governor Bill Richardson took a number of aggressive steps today to help balance the state budget, according to a statement released by his office. The Governor signed legislation, while vetoing irresponsible budget cuts that would have cut critical health services, closed prisons and jeopardized protection for kids.

After taking final action on the special-session legislation, Governor Richardson signed an Executive Order that sets five furlough days for state employees and further cuts state agency budgets by an average of 7 percent for the budget year.

The Governor’s budget action, combined with his efforts to save $150 million by freezing capital outlay projects, will put the state on a responsible path toward balancing the current-year budget.

“Since the session ended, I have heard from hundreds to New Mexicans, including many legislators – who want me to exercise my veto pen to preserve those services,” Governor Richardson said. “I understand and share their concerns, particularly in light of the previous budget cuts.

“However, it would be fiscally irresponsible to simply veto this bill and wait for the Legislature to meet again in January – more than half-way through the fiscal year. “Instead, I am signing an Executive Order today that directs more responsible budget cuts across state government.”

Governor Richardson took the following action on legislation:

SIGNED

HB 6 Transfer Reserves to General Fund

HB 16 Reduce Legislative Appropriations

SB 24 School District Flexibility and Insurance

SIGNED WITH LINE ITEM VETOES

HB 17 Reduce General Fund Appropriations

SB 29 STB Auth. for Capital Projects

Pocket Veto

SB 25 School District Cash Balance Transfers

Governor Richardson’s Executive Order spells out his plan for state agencies:

EXECUTIVE ORDER 2009-044

ORDER CONCERNING FISCAL YEAR 2010 BUDGET GAP; REQUIRING STATE AGENCIES TO REDUCE FISCAL YEAR 2010 OPERATING EXPENDITURES; REQUIRING THE FURLOUGH OF STATE EMPLOYEES; DIRECTING THE PUBLIC EDUCATION DEPARTMENT AND HIGHER EDUCATION DEPARTMENT TO TAKE STEPS NECESSARY TO RESTORE FURTHER CUTS TO PUBLIC AND HIGHER EDUCATION

WHEREAS, Governor Richardson called the Legislature into special session in order to address the State’s fiscal year 2010 budget shortfall;

WHEREAS, even if fully implemented, the so-called solvency bills passed during the First Special Session of the Forty-Ninth Legislature were insufficient to bridge the budget gap;

WHEREAS, among other shortcomings, the solvency bills failed to cut capital appropriations or effectively use supplemental severance tax bonding capacity;

WHEREAS, Section 2(A)(4) of the House Appropriations and Finance Committee Substitute for House Bills 17 and 33 (“HB 17/33”), as amended, sought to impose deep, aggregate cuts of 7.6% to the already reduced operating budgets of State agencies under the control of the Governor;

WHEREAS, implementing such cuts would likely have caused dangerous and unacceptable harm to core services;

WHEREAS, the Administration concluded that the cuts called for in Section 2(A)(4) would likely have (i) severely compromised the ability of the Children, Youth, and Families Department to investigate child neglect and abuse cases and take kids into protective custody, putting kids at risk and jeopardizing federal funding to the State; (ii) forced the Department of Health to temporarily close some public health offices and reduce services at school-based and rural primary care clinics, which provide services to citizens with few (if any) other treatment options; and (iii) resulted in the closure of two adult correctional facilities, resulting in hundreds of prisoners being released early with inadequate supervision and employees being put out of work;

WHEREAS, to avoid such unacceptable results, the Governor this day vetoed Section 2(A)(4) of HB 17/33;

WHEREAS, the Richardson Administration recognizes the need to responsibly and meaningfully reduce agency expenditures as part of a package of solvency measures that completes the job started in the First Special Session of the Forty-Ninth Legislature;

WHEREAS, the expenditure restrictions imposed in this Executive Order will result in savings that will, along with other measures to be proposed by the Richardson Administration during future legislative sessions, bridge the budget gap while maintaining adequate levels of services and a prudent level of budget reserves; and

WHEREAS, the fiscal year 2010 budget shortfall is so severe that solvency measures unfortunately must include the furlough of state employees.

NOW, THEREFORE, I, Bill Richardson, Governor of the State of New Mexico, by virtue of the authority and responsibility vested in me by the Constitution and the laws of the State of New Mexico, do hereby order the following:

1. Expenditure and Encumbrance Restrictions.

A. General Fund Agencies. In fiscal year 2010, the following agencies shall restrict their expenditures from general fund operating appropriations to achieve the savings indicated, calculated as the difference between their fiscal year 2010 general fund operating budgets and the amount of their actual expenditures:

Agency Expenditure Savings Requirements

Taxation and Revenue Department $3,902,300

Department of Finance and Administration $1,438,800

General Services Department $892,500

New Mexico Sentencing Commission $36,200

Public Defender Department $854,000

Governor $244,900

Department of Information Technology $70,400

Personnel Board $89,500

Public Employee Labor Relations Board $24,600

Border Authority $25,700

Tourism Department $332,300

Economic Development Department $466,600

Regulation and Licensing Department $873,100

New Mexico State Fair $21,800

Gaming Control Board $314,200

State Racing Commission $115,700

Cumbres and Toltec Scenic Railroad Commission $5,000

Office of Military Base Planning and Support $11,300

Spaceport Authority $62,300

Cultural Affairs Department $1,684,400

New Mexico Livestock Board $58,700

Energy, Minerals and Natural Resources Dept. $995,400

Intertribal Ceremonial Office $200

State Engineer/Interstate Stream Commission $1,218,000

Organic Commodity Commission $9,300

Commission on Status of Women $39,600

Office of African American Affairs $41,000

Commission for the Blind $41,400

Indian Affairs Department $188,200

Aging and Long-Term Services Department $1,274,500

Human Services Department, including $16 million that will be replaced by increased federal funds and appropriations from the Tobacco Settlement Program Fund $28,702,500

Workforce Solutions Department $402,900

Division of Vocational Rehabilitation $117,800

Governor's Commission on Disability $58,500

Developmental Disabilities Planning Council $131,900

Department of Health, including $2 million that will be replaced by increased federal funds $10,364,900

Department of Environment $800,400

Office of the Natural Resources Trustee $14,400

New Mexico Health Policy Commission $40,300

Children, Youth and Families Department $6,023,000

Department of Military Affairs $566,300

Parole Board $14,600

Juvenile Parole Board $6,700

Corrections Department $11,389,600

Crime Victims Reparation Commission $71,600

Department of Public Safety $2,826,100

Homeland Security & Emergency Management Dept. $166,600

Public Education Department $479,900

Higher Education Department $1,526,900

Total General Fund Savings: $79,036,800

B. Non-General Fund Agencies. The following agencies funded by other state funds shall develop expenditure restriction requirements that result in responsible but meaningful operating budget savings for fiscal year 2010: State Investment Council; Board of Examiners for Architects; Medical Board; Board of Nursing; State Board of Licensure for Engineers and Land Surveyors; Board of Veterinary Medicine; Department of Game and Fish; Youth Conservation Corps; Commission for Deaf and Hard-of-Hearing Persons; Workers' Compensation Administration; Miners' Hospital of New Mexico; Veterans' Services Department; and Department of Transportation. The operating budget savings requirements of these agencies are subject to approval by the State Budget Division (“SBD”) of the Department of Finance and Administration (“DFA”). Agencies subject to this subsection must submit their proposed savings requirements to SBD by 5:00 p.m. on November 17, 2009.

C. Implementation.

i. Agencies subject to expenditure restrictions under Section 1(A) or Section 1(B) shall submit to SBD for SBD’s review and approval a fiscal year 2010 expenditure plan. The expenditure plan shall be in such form and contain such information as SBD may require but, at a minimum, shall show the agency’s operating budget by category, the agency’s restricted expenditure amount by category, and the difference (savings) between the two. All plans are due to SBD by 5:00 p.m. on November 20, 2009.

ii. Agencies may request and SBD may approve of expenditure plan amendments, provided that the total savings under the amended plan equals the amount stated in Section 1(A) or amount developed pursuant to Section 1(B).

iii. Agencies may not encumber or expend more than the expenditure amount in its SBD-approved expenditure plan for any given category.

iv. By 5:00 p.m. on November 25, 2009, agencies shall, as necessary, submit to DFA’s Financial Control Division and Contracts Review Bureau the necessary documentation to reduce outstanding encumbrances to bring them in line with their expenditure plans.

v. DFA is authorized and empowered to take such other action as may be necessary or advisable to effectuate or enforce the requirements contained in or developed pursuant to Section 1 of this Executive Order, including deadlines. Without limiting the generality of the foregoing, DFA may in appropriate cases extend the deadlines contained in this Section in writing.

2. Furloughs.

A. Immediately, the Chief of Staff for the Office of the Governor shall:

i. notify the unions with collective bargaining agreements covering employees at agencies subject to Section 1(A) or Section 1(B) of this Executive Order of the need for furloughs and discuss those furloughs with the unions;

ii. develop a furlough plan that:

a. is limited to those agencies subject to expenditure restrictions under Section 1(A) or Section 1(B) of this Executive Order;

b. is consistent with Regulation 1.7.10.8 NMAC;

c. limits the number of required furlough days, which, if possible, should be no more than five (5) days during fiscal year 2010;

d. to the extent practicable and advisable, given the needs of individual agencies, schedule furlough days in a manner that least affects the provision of services to the public;

e. provides a process for limited exceptions based upon public safety, welfare, and cost-effectiveness; and

iii. seek approval of the furlough plan from the State Personnel Board in accordance with Regulation 1.7.10.8(A) NMAC; and

iv. oversee agency implementation of the approved furlough plan.

B. Agencies subject to the approved furlough plan shall implement the plan.

C. The State Personnel Director shall issue necessary or desirable guidance to affected agencies to implement the approved furlough plan, which guidance shall help agencies avoid overtime or other liabilities during the weeks when the furlough is effective.

3. Non-Compliance with Section 1 or Section 2. DFA shall report to the Office of the Governor any agency that fails to comply with the requirements, including deadlines, of Section 1 or Section 2 of this Executive Order. The head of an agency, including a board or commission, that fails to comply with any of the requirements of Section 1 or Section 2 of this Executive Order shall be held accountable for the non-compliance.

4. Agencies Not Under Gubernatorial Control. Agencies not under Gubernatorial control and whose fiscal year 2010 operating budgets were not reduced in the First Special Session of the Forty-Ninth Legislature are respectfully requested to impose expenditure restrictions that will result in administrative operating budget savings of approximately three percent (3%). These agencies include the Public School Insurance Authority, Educational Retirement Board, Public Employees Retirement Association, Public School Facilities Authority, Retiree Health Care Authority, State Commission of Public Records, and Martin Luther King, Jr. Commission.

5. Recalculation of Fiscal Year 2010 Support Restoration Subgrants. In order to offset the reductions to public and higher education contained in HB 17/33 and pursuant to Executive Order 2009-035, the Public Education Department and Higher Education Department are directed to expeditiously:

A. calculate the amount of each local educational agency’s and public institution of higher education’s fiscal year 2010 Support Restoration Subgrant; and

B. take the steps necessary to enable the recalculated Support Restoration Subgrants to be awarded and funds distributed to local educational agencies and public institutions of higher educations.

6. General Provisions.

A. This Executive Order supersedes any other previous orders, proclamations, or directives in conflict.

B. This Executive Order shall take effect immediately and shall remain in effect until such time as it is rescinded by the Governor.

C. This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the State, its agencies, instrumentalities, or entities, its officers, employees, or agents, or any other person.

Gov. Bill Richardson Announces Heavy Vetos in HB 17 with Substitutes by Executive Order

Here are some of the points I gleaned by watching NMI's webcast of Governor Bill Richardson's press conference today about the budget bills passed by the New Mexico Legislature in its special session last month. They're from my spotty and rather disorganized notes.

On HB 17, Reduce 2009 General Fund Appropriations, Richardson said he decided to veto most of it. He explained that the Legislature's provision to divert discretionary stimulus funds to the general fund is not allowed by federal law. The Governor said he issued an executive order to replace the vetoed parts of the bill, which he said directs "more responsible cuts" to agencies that average 7%, but are targeted to take into consideration past cuts and avoiding cuts to critical services.

He said he held Medicaid cuts to 1% and protected classrooms. There will be no cuts to children's health care, senior meals, veteran's services or border security. No state parks will be closed. He said he moderated and targeted cuts within Health and Human Services, prisons and Children, Youth and Families.

Richardson said he decreased some of the larger cuts to the executive branch, which will still equal more than 5% on top of 4% cuts that were already in effect. He has ordered five mandatory furlough days for employees in the Executive Branch and will donate five days of his salary to the general fund, although he won't take any days off. He called cuts to departments like Environment "painful."

Regarding capital outlay, Richardson said he'd continue the freeze he ordered, and work with the Legislature to void $150 million in capital outlay projects, as lawmakers directed.

He will push for reform of double dipping, which he said could yield as much as $7 million in savings while preserving fairness.

The Governor said he objected to the political attacks on his exempt employees, saying that the Legislators did not cut a single one of their 166 permanent exempt staff. He vetoed that portion of the bill. He said he cut the salaries of his exempt employees a year ago by 2%, but others did not.

He said the cuts he did include in the executive order would affect 84 exempt employees and save approximately $6 million. Currently, the government has 2900 vacancies; of those, 1000 will be permanently cut.

The Governor said he won't pretend that this will solve the problem, that it was just a start. He cited the national and worldwide recession as being the primary reason for the state's budget problems.

I wanted to get some of this info out, even though it's incomplete and preliminary. After Governor Richardson finished speaking, he called on cabinet secretaries to comment and then took questions from the media. I'll have more later.

Gov. Bill Richardson to Unveil Budget Decisions at Noon Press Conference; NMI to Webcast

Today's the deadline for Governor to act on legislation passed at the New Mexico Legislature's special session, which ended on October 23. Yesterday, his office sent out a press release announcing he'd be appearing at a Noon press conference today at the Roundhouse to reveal his decisions on signing or vetoing -- in part or in total -- the final six budget-related bills sent up to him by lawmakers.

“Governor Richardson is prepared to take fiscally responsible action to help close the budget gap, while minimizing budgets cuts to education and Medicaid services for vulnerable New Mexicans,” said Gilbert Gallegos, a spokesman for the Governor.

On Monday, Richardson signed HB 3, but line-item vetoed some of the bill's provisions. He signed HB 1, the feed bill, on November 2nd.

Watch It: If all goes according to plan, the New Mexico Independent will be and live blogging today's press conference at Noon. An hour later, they'll be doing the same for a presentation on combined reporting for interstate corporations at today's Economic and Rural Development Committee (ERDC) meeting.

State Auditor Hector Balderas Responds to Gov. Richardson's Veto of Audit Fund Transfer

State Auditor Hector Balderas just issued a statement praising the decision by New Mexico Governor Bill Richardson to veto the transfer of funds out of the audit department:

“I want to commend Governor Richardson’s veto of the $500,000 transfer from the Audit Fund. In these tough economic times, it’s critical that every effort is made to protect New Mexico taxpayer dollars from financial fraud, waste, and abuse. This past March, the legislature cut my agency's general fund appropriation by 14%, more than most agencies. This substantial budget decrease, combined with the Audit Fund transfer and additional 4% cut made to my office during the Special Session, would severely impact our ability to protect New Mexicans. I appreciate Governor Richardson's recognition that the Audit Fund transfer would put my agency at-risk to regulate government agencies.

"We all must make sacrifices to help balance the budget, but it must be done in a fair and judicious manner with the best interest of the taxpayer in mind. I will continue to aggressively fight to not only protect my agency from further cuts, but to also ensure that every measure and agency resource is used to make governmental agencies accountable.”

Governor Bill Richardson Signs HB 3, Agrees to Deep Cuts for College Affordability Scholarships

Governor Bill Richardson signed House Bill 3 today, but executed some line-item vetoes. The Governor reluctantly agreed to cut $68 million from the College Affordability Endowment Fund -– a program he created to provide need-based scholarships to New Mexicans -- according to a statement released this afternoon.

“It pains me to pull this money from a program that has successfully increased opportunities for many New Mexicans to attend college,” Richardson said. “Unfortunately, we all have to make sacrifices in order to balance the budget. We’re going to have to continue to make these kinds of sacrifices, especially when it comes to cutting capital outlay projects, when the Legislature meets again in January.”

In signing HB 3, Richardson agreed to “sweep” nearly $110 million from various state funds and accounts to help shore up the state’s main budget account. The bill targets money that is not being used. Most of that savings will come from the College Affordability Fund.

Richardson used his veto pen today to keep about $6.5 million in funding from being swept. For example, the Governor:

• Saved $500,000 in funding for domestic violence programs

• Saved $500,000 that was targeted from the State Auditor’s account. Without the money, the Auditor would not have been able to conduct effective audits.

• Saved $3 million that would have been cut from the E911 Enhancement Fund in order to preserve $900,000 in federal funding for that project.

• Saved $800,000 for the Trail Safety Fund, which is funded by fees and designed to protect the safety of outdoorsman and other New Mexicans who use off-highway vehicles.

• Saved $1.7 million for Pre-Kindergarten programs.

The statement from the Governor Richardson's office explained that he worked with the Legislature to create the College Affordability Fund in 2005. Since then, thousands of New Mexicans have taken advantage of the scholarships, which are designed for students with financial need, who do not qualify for other state grants or scholarships.

Today’s action will remove $68 million out of the nearly $84 million currently in the fund. The earnings from the fund are used to pay for scholarships. There are currently 2,366 students receiving scholarships.

Gov. Richardson Signs Feed Bill, Will Hold Office Hours in ABQ, Las Cruces

Governor Bill Richardson today signed the Feed Bill (HB 1) that pays for the costs of the recently wrapped special session of the Legislature. According to the Governor's office, Richardson is "currently conducting a thorough review of the remaining bills passed by the Legislature during the special session."

Another press release today announced that Gov. Richardson will hold office hours on Wednesday, November 4, 2009 in Las Cruces and Albuquerque to hear from New Mexico residents about the budget bills passed by the Legislature. The Governor has until November 12 to sign, veto or partially veto the budget bills.

The Governor will grant five minute meetings to New Mexicans who would like to discuss the budget cuts. Meetings will be held on a first-come, first-served basis. Sign-up will begin at 9:00 AM in Las Cruces and at 1:00 PM in Albuquerque. See below the break for more information:

Las Cruces Office Hours
10:00 AM - 12:00 PM
New Mexico Farm & Ranch Museum
4100 Dripping Springs Road
Las Cruces, NM

Albuquerque Office Hours
2:00 PM - 4:00 PM
CNM Workforce Training Center
5600 Eagle Rock NE
Albuquerque, NM

Those seeking time with Governor Richardson must present a valid New Mexico driver’s license. If an organization wants time with the Governor, he will meet with a representative or a group of representatives at one time.

New Mexicans that cannot make the scheduled office hours on Wednesday may also contact the Governor’s Office with their thoughts about the budget bills by email: Special.session@state.nm.us or by phone: 505-476-2210.

Better Choices NM Urges Gov. Richardson to Line-Item Veto Agency Cuts, Protect Education & Medicaid

Better Choices New Mexico (BCNM) announced in a statement released today that the group sent a letter to last week asking him to take swift yet strategic action as he addresses legislation passed during the recent special legislative session. Click to read a copy of the letter (pdf). Excerpt:

We urge you to line-item veto Section 2.A.(4) of HAFC substitute for HB17 & 33 as amended, eliminating the Legislature's requirement for aggregate agency cuts of 7.6 percent. We would also like to strongly emphasize that the subsequent subsections of paragraph (4) outlining agency and program exemptions must be observed should you consider additional executive action for budget reduction, in lieu of this section of the bill. Certainly we urge you to honor the Legislature's clear intention to hold all Medicaid funding harmless from budget cuts.

Before the special session convened, BCNM warned about the human consequences of a cuts-only approach to the budget deficit, and released information documenting 20 specific ways the cuts would hurt New Mexicans in their "20 Ways/20 Days" campaign. The Governor has until November 12 to sign or veto bills in whole or in part.

BCNM is a group of small business organizations, faith leaders, working families, education employees, lawmakers, and various advocacy groups, formed to offer alternatives to continued state budget cuts. The alliance believes that legislators and the Governor must take a balanced approach to addressing New Mexico’s fiscal crisis, an approach that reflects consideration of all revenue generating mechanisms. Additional information on Better Choices New Mexico and related resources is available at www.betterchoicesnewmexico.com.

Better Choices New Mexico members that signed on to the letter: Lutheran Advocacy Ministry • NM Conference of Churches • American Federation of Teachers–New Mexico • National Education Association–New Mexico • AFSCME • Communications Workers of America–Local 7076 • Center for Civic Policy • SouthWest Organizing Project • Conservation Voters New Mexico • Community Action New Mexico • America Votes Education & Action Fund • New Mexico Coalition to End Homelessness • New Mexico Solutions • New Mexico Youth Providers Alliance • New Mexico Early Childhood Alliance • Families and Youth, Inc. • Family Justice Alliance • New Mexico School Nurses Association • New Mexico Coalition Against Domestic Violence • Planned Parenthood of New Mexico • Hands Across Cultures • Hogares, Inc. • New Mexico Child Care and Education Association • New Mexico Voices for Children.

NM Legislative Majority Leadership Responds to Governor's Statements on Special Session Budget Bills

The Democratic leadership in the NM Legislature issued a press release late Friday afternoon through the office of the New Mexico Senate. It accompanied a copy of a letter they hand-delivered to Governor Bill Richardson's office yesterday.

The leaders said the letter was in response to a issued on October 27, 2009, in which Governor Bill Richardson, joined by Katie Falls, Acting Human Services Director, indicated that if the budget legislation passed by the legislature is signed by the Governor, it would slash critical services – such as services for children’s health care, behavioral health care, health care for developmentally disabled and medically fragile individuals as well as those dealing with HIV/AIDS – and would reduce nutrition assistance for seniors.

The letter essentially urges Gov. Richardson to use his discretion to protect Medicaid from cuts the lawmakers said neither the Legislature nor the Governor intended in the budget legislation passed during the special session. It refers to language the Governor may consider to be "ambiguous" in the bill -- and informs him that there are ways to get around it if he should so desire. Click for a copy of the letter (pdf), which is signed by Sen. Michael Sanchez and Rep. W. Ken Martinez.

This is the latest in an ongoing verbal battle conducted via press releases, on the , in the media and even on between the Governor and legislators over the budget-fix legislation passed during the special session. The Governor must sign or reject the legislation in whole or in part by November 12.

(Updated) Criticizing Legislators, Gov. Richardson Orders Freeze on Capital Outlay Projects

Update: Lt. Gov. Diane Denish released a statement in response to Governor Richardson's action to freeze capital outlay projects:

“Last week, I was proud to cast the tie-breaking vote in the Senate to cut $150 million from the state’s capital outlay projects. Today I applaud the Governor’s decision to freeze all capital outlay projects, because during these challenging economic times the state simply can’t afford to continue doing business as usual. And as we approach the next legislative session, I believe we must move towards reforming the entire capital outlay process before anyone starts talking about cutting services. We simply must find more creative ways for government to be leaner and more efficient. This freeze on capital outlay projects won’t fix the entire problem, but it is certainly a step in the right direction."
*****************
Governor announced in a statement released today that he is ordering a freeze on capital outlay projects with the goal of realizing as much as $150 million in savings. The freeze will apply to projects initiated by the Legislature and the Governor.

“I am taking this bold action since the Legislature chose not to cut even one dime of its pork projects,” Governor Bill Richardson said. “These pork projects should be the first to be cut before we take any action that affects people.”

The release stated the Governor was making this move because the Legislature "simply suggested that they consider looking at projects to be cut in January. However, no action was taken to actually cut the projects."

As I reported previously, Sen. Eric Griego introduced an amendment to a primary House budget bill, HB 17, on the last day of the special session. It directed the legislative council service, the legislative finance committee and the department of finance and administration to review all unexpended capital outlay projects funded by general fund appropriations and identify at least $150,000,000 of voidable capital outlay projects that would be submitted as a bill at the January session.

The original vote on Sen. Griego's amendment was a tie and Lt. Governor Diane Denish, in her role presiding over the Senate, broke it with a vote in favor of the measure. Later that day, Sen. John Ryan (R-Albuquerque) abruptly moved for a reconsideration of the amendment, which prompted a fierce and personal debate about the reasons for his action. After much ado, the amendment was again approved, this time by a margin of 21-19. Sen. Griego called it his "people before pork" amendment.

Jumping ahead of the actions required by the Griego amendment, Governor Richardson has now directed state agencies to cancel all grant agreements for capital outlay. Only those projects that already have third-party agreements will be honored as of Oct. 23. The freeze on capital outlay projects will remain in place through the next legislative session in January when the issue can be revisited, according to the Governor's statement. 

I imagine the Governor's action will cause more than a bit of consternation on the part of any number of legislators. Already, there's some talk that only the Legislature has power over capital outlays, and that the Governor has no authority to order a freeze. No doubt this is just one more skirmish in what will inevitably be a long and brutal battle of wills as the true impact of the state's falling revenues becomes more apparent and damaging.

NM Senate Issues Statement on Accomplishments of Special Session

The following statement was just released by the New Mexico Senate about the special Session the Legislature that ended this evening after seven days of battles to plug large deficits in the state budget:

Weary Senate Democrats came together today to bring the special session to an end by passing two important bills – the House Appropriations and Finance Committee Substitutes for House Bills 17 and 33 (HB 17), and the House Appropriations and Finance Committee Substitute for House Bill 6 (HB 6). HB 17 was passed by the Senate with 5 amendments, requiring the House to consider the amendments. The House concurred with four of the amendments, and asked the Senate to recede from a fifth amendment. Once the Senate receded, the stage was set for both bodies to end the session by adjourning “sine die.” Both the Senate and House adjourned at approximately 7 PM.

As passed by the House and Senate, HB 17 – along with Senate Bills SB 10 and SB 13 – would give flexibility to school districts in making budget adjustments to accommodate education cuts that, after offsets enacted by the legislature would reduce total education funding by less than 1 percent. Under HB 17, recurring General Fund expenditures would be offset by nonrecurring General Funds and federal stimulus education funds. HB 17 also funds an emergency school relief fund using $3 million in nonrecurring funds to try and keep small rural schools harmless. An additional $29 million would be transferred from the Public School Capital Outlay Fund to cover public school insurance payments.

In explaining the details of HB 17, Senator John Arthur Smith (D-Hidalgo, Luna & Sierra-35), Chair of the Senate Finance Committee, noted on the Senate Floor that because the requirement in the Governor’s Proclamation to hold Education as harmless as possible, deeper cuts had to be made in general government operations, including a reduction of approximately 7.6 percent for executive agencies. Cuts in the General Fund for Developmental Disabilities program and most of the cuts in Medicaid will be offset with federal stimulus funds. Some smaller agencies, like the State Police, were exempted from the larger cuts. The Governor was also asked to reduce salaries for 102 exempt positions.

HB 6 authorizes a transfer of $225 million from the Operating Reserve to the General Fund. The transfer would take care of the deficit for the past fiscal year and leave a smaller amount to help cover shortfalls for the current fiscal year. HB 6 also authorizes the Governor to transfer up to $115 million from the Tax Stabilization Reserve to the General Fund in the event existing funds cannot satisfy appropriations from the General Fund.

Passage of HB 17 and HB 6, taken in conjunction with passage of HB 3 (which ‘sweeps’ about $100 million of unused state funds into the General Fund), and Senate Bill 13 (which give public schools the flexibility to adjust class loads, staffing patterns and other programmatic matters) has allowed the Senate and the legislature as a whole to complete its painful work of coming up with the best possible solution to the immediate financial crisis within the limitations imposed by the Governor.

“When you have huge needs and disappearing monies to fund them, everyone ends up feeling the pain of the corrections that need to be made to sort out those needs and make the difficult decisions to fund some more than others in order to minimize the damage that will follow from those decisions. When the legislature returns this January, we will have to continue to look for other solutions to the continuing erosion of our state revenues,” said Senator Michael S. Sanchez (D-Valencia-29), Senate Majority Leader.

“This is certainly not a perfect response to our budget crisis, but under the circumstances – the Governor’s limitations and the uncertainty of how much we will ultimately need to deal with this situation when we come back for the regular session in January – this is at least something that will get us through the next several months,” said Senator John Arthur Smith (D-Hidalgo, Luna & Sierra-35), Chair of the Senate Finance Committee.

“I want to thank my fellow legislators for coming up with immediate solutions for our budget woes that will at least enable us to get to the regular legislative session in January and continue this difficult work of funding our essential government and education services,” said Senator Carlos R. Cisneros (D-Los Alamos, Rio Arriba, Santa Fe and Taos), Vice-Chair of the Senate Finance Committee.

“The Senate has worked countless hours during this compressed timeframe to preserve education and save state government employees’ salaries in every way we could conceive. I appreciate the contributions made by all the parties to our discussions and debates, and am thankful that we could come together with solutions that meet the needs of these difficult economic times,” said Senator Howie C. Morales (D-Catron, Grant & Socorro-28).

“We’ve worked hard over these past seven days to come to an agreement that treats everyone affected by the state budget as fairly as possible, while at the same time saving Medicaid and minimizing the cuts to education,” said Senator George K. Munoz (D-Cibola & McKinley-4).

“My mission coming into this special session was to minimize cuts to education and Medicaid. With all the provisions we’ve worked hard to pass, keeping education cuts to less than 1 percent provides protection for our students and teachers. We also further supported education by eliminating delays in funding for the Education Retirement Board program,” said Senator John M. Sapien (D-Sandoval-9).

He pointed out that he was glad to have been able to help stave off an effort to delay providing this funding until a future fiscal year: “In the long run, this will save the state money because the funding we provide now will be leveraged upward whenever the market recovers, making each dollar used to fund the program now worth much, much more in the future.”