Coronavirus Plan: how to balance the (FY 2021) State budget

The FY 2021 budget begins on July 1. The budget passed in the 2020 legislative session which wrapped up in February. Total spending contained in the budget amounted to $7.6 billion. Gov. Lujan Grisham vetoed $50 million worth of infrastructure spending as concerns mounted over the budget mounted, but a combination of low oil prices and drastically slowing economic growth will lead to spending at far lower levels than those in place today.

In an effort to put forth some real, specific ideas to address New Mexico’s looming budget shortfall, here are some ideas for legislators and Gov. Lujan Grisham to consider in a special session dealing with the FY 2021 budget.

For starters, the focus needs to be on spending cuts. Tax hikes during this time of economic crisis are simply unacceptable.

  1. The early childhood fund created by House Bill 83 which is otherwise expected to receive $320 million this year should be put on hold.
  2. “Free” college will have to be canceled for a savings of $27 million (between the $17 million directly appropriated for the program and the $10 million allocated to the Lottery Scholarship program.
  3. Under the FY 2021  budget most State employees are expected to receive 4 percent pay raises.  This comes on top of raises passed the previous year. Cabinet secretaries received 17% pay raises in 2019. In a time of shared sacrifice with some economists from the Federal Reserve predicting unemployment rates of 30% this is a simple way to save $179 million.
  4. Film subsidies as expanded in SB 2 in 2019 could cost New Mexico up to $110 million annually.  The cost to New Mexicans of these subsidies should be eliminated or at least reduced.
  5. Infrastructure is a core function of government. $50 million in badly-needed infrastructure spending was vetoed by the Gov. due to budget concerns from this session. It is time to eliminate or rework New Mexico’s Davis-Bacon prevailing wage law to get more bang for our infrastructure bucks and put more New Mexicans back to work in the trades.
  6. According to the Legislative Finance Committee operating the New Mexico Rail Runner costs $33 million annually. The train has been shut down due to the virus. Shutting it down permanently or at least for the duration of this crisis would save scarce resources.

 

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