BULLETIN PHOTO BY TABITHA ROSSMAN

BULLETIN PHOTO BY TABITHA ROSSMAN

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Bulletin report

Gov. Susana Martinez announced her Fiscal Year 2018 budget proposal on Tuesday, Jan. 10. Her office reports the budget will close the current budget deficit caused by the oil and gas crash without raising taxes. At the same time, she reports the proposal protects classroom spending, economic development initiatives, and public safety.

“This is a responsible budget that reduces the size of government while at the same time protects the progress we’ve made in diversifying our economy, reforming our education system, and keeps our communities safe,” Martinez said. “This sends a message that it’s up to state government to tighten its own belt – not our hardworking families. Furthermore, this proposal will ensure that we have a strong, healthy savings account for the next oil and gas downturn or the next time the federal government fails us.”

The governor’s $6.09 billion budget for FY18 maintains the cuts adopted by the Legislature in the 2016 special session. It also proposes cuts to agencies that weren’t as impacted during the special session, consolidates certain state agencies, modernizes and simplifies the tax code, and eliminates subsidies for counties that have already raised taxes. Prior to the 2016 special session, Martinez ordered executive agencies under her authority to reduce their budgets in anticipation of a projected shortfall and proposed a series of measures to shore up reserves during the special session.

Last year, Martinez called the Legislature into special session to address the revenue shortfall caused by the largest crash of oil prices in New Mexico history. However, lawmakers did not close out the potential for a shortfall in FY17 and left options on the table, the governor reports.
The FY 17 solvency package includes:

• Sweeping $268.5 million in various cash and fund balances from across state government, including a portion – $12.5 million – of lawmakers’ personal retirement accounts
• That also includes $120 million in administration funds within school districts that are not being used in the classrooms. With the sweep, the fund will still have $132 million and would allow school districts to keep their reserves at 5 percent as currently directed.
• Reducing the gross receipts tax “hold harmless” distribution to those counties and municipalities that have already raised taxes on their citizens. This will save $9 million.
• Reducing budgets for the Legislature and Higher Education, from 3 percent and 5 percent respectively, to the 5.5 percent the majority of other agencies are having to deal with (total of $4 million recurring).
• To prevent state employee furloughs and salary reductions, the proposal includes a 3.5 percent retirement swap from state employer contribution to state employee contribution.
• The elimination of some credits and assessments paid by Medicaid to the New Mexico Health Exchange and New Mexico Medical Insurance Pool (total of $17 million recurring).

“Lawmakers avoided making tough choices, but we have some time now to work together on a budget that restrains spending, doesn’t raise taxes, and protects the progress we’ve made on education, economic development, and public safety,” Martinez said. “How we address this budget challenge will determine the future of New Mexico for generations. If we abandon our reforms, continue growing government, and look to taxpayers to bail us out, we should not expect the bright future that is within our grasp.”

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