OK, settle down, everybody seems to be saying as this latest special session approaches in Santa Fe, the only way to accomplish anything is to sit down and talk. And so they did, late last week and into this week, in preparation for the gavel coming down, at noon on Wednesday (May 24), on yet another attempt to pass a state budget everyone can live with.
How long this special session will take remains, as of this writing, an uncertainty; it depends on how successful those pre-session talks were. But this much we know going in: These are contentious political times, very partisan at the Roundhouse in Santa Fe (and elsewhere), and if some of that can’t be set aside during this special legislative session, state government will face an even bigger fiscal crisis than it has already.
A lot hinges on the outcome. The governor’s call for the session includes higher education and legislative agency funding, tax reform legislation, the creation of a “rainy day” fund and some still-pending confirmations of university regents. But what’s really on the table is an incomplete budget for the rapidly approaching fiscal year.
You may recall that the Democratic-controlled Legislature passed a budget in March, but it contained about $350 million in new taxes—something Republican Gov. Susana Martinez would not allow. So our never-new-taxes governor took out her line-item veto pen and took away millions of dollars in higher education funding and, in the spirit of our divided times, cut funding to legislative agencies and activities.
Then came a lesson in the balance of powers: After the executive branch cut the funding, the legislative branch took issue and filed a complaint in the judicial branch, seeking intervention. The Supreme Court could have exercised some real muscle at that point but instead showed restraint, refusing to get into the middle of the lawmakers’ clash with the governor.
In that constitutional skirmish, the executive branch won the day—and the power of the line-item veto remains firmly intact.
Nevertheless, it doesn’t appear the governor really wants to defund the legislative branch, she’s just using her power as a bargaining chip. The Supreme Court decision not to hear the lawmakers’ case makes it all the more valuable.
Nor does she want to cut education funding, though her veto pen in March cut millions of dollars from the state’s colleges and universities as well as special schools such as the ones serving the deaf and the blind. That created far more consternation around the state than the cuts to the legislative agencies, as schools’ governing boards had to piece together their own budgets for the upcoming fiscal year against a backdrop of state funding uncertainty.
A lot of student tuition rates went up in the last couple of months around the state, as schools’ governing bodies found ways to offset possible state funding shortfalls.
What Martinez is saying she wants is for lawmakers to pass some reforms to New Mexico’s gross receipts tax system, and she’s got a champion in that cause in Rep. Jason Harper, R-Rio Rancho. Among other things, he has pushed for closing specific tax breaks and exemptions (such as for nonprofit hospitals) and lowering the statewide GRT base rate. Democratic lawmakers, however, say they don’t want to be too hasty in passing such reforms, expressing concerns about possible unintended consequences of a rushed decision.
Meanwhile, the economy itself isn’t helping. The state has the highest unemployment rate in the nation and two-plus years worth of significant state revenue declines have left state government with an already-tight budget. The oil and gas industry, which provides about a third of our state government’s tax revenues, has been in a deep slump, and while there are indications of a rebound, it’s not in time for this year’s budgetary shortfalls.
Somewhere and somehow, either revenue will have to be raised (tax increases) or expenses will be cut (legislative and other pork), or the budget simply won’t balance. Count on it being some of both, but not enough of either.
Tom McDonald is editor and founder of the New Mexico Community News Exchange and owner-manager of Gazette Media Services. He can be reached at email@example.com.