On Tuesday, January 19, at 12:00 noon, the 60-day New Mexico Legislature will begin. Governor Michelle Lujan Grisham released a proposed $7.3 billion budget plan on Monday, January 11. The released proposed budget is a zero-growth budget. It keeps spending levels flat for the coming fiscal year that starts on July 1, 2021. The 2021-2022 budget authorizes one-time expenditures aimed at fortifying businesses and families hit hard by the COVID-19 pandemic.
On January 19, the Legislative Finance Committee will unveil its own spending plan. During the session lawmakers will use the Governors proposed budget and their own to come up with a new budget bill during the session. The New Mexico legislature is required by law to enact a balanced budget with no deficit spending and with a reserve fund.
HIGHTLIGHTS OF THE BUDGET
The major highlights of the proposed $7.3 billion budget released by the Governor are as follows:
$475 million for additional pandemic relief for New Mexico.
$893.1 million in total fund money for behavioral health support across all state agencies.
$193 million for the continued rollout of early childhood education and care investments.
$5.1 million for youth, adolescent, and young adult suicide prevention.
$151.2 million to maintain K-5 Plus, Extended Learning Time (ELTP) & Career Technical Education and Community School Programs.
$26 million to continue on the promise for tuition-free education at one of New Mexico’s public colleges, including $4 million for a pilot program for students that lost the lottery scholarship.
$25 million to restore and revitalize the tourism economy.
$10 million from the General Fund for broadband expansion across New Mexico, which should be bolstered by significant funding from capital outlay.
$4.5 million for investments in cybersecurity for state agencies and public education institutions.
$2 million for innovative grid modernization projects.
$6 million for the Secretary of State to fund local elections.
Links to related news and sources quoted are here:
ONE TIME SPENDING ALLOCATIONS
The Governor’s proposed budget contains one-time major expenditures as follows:
The $475 million listed for pandemic relief efforts. This includes tax relief and cash assistance for essential workers
The $10 million listed to expand a state broadband network that has come under scrutiny with many residents working and attending school from home.
The $25 million listed for a new state tourism campaign
$80 million fund for school districts with the lowest-income students
$60 million for school districts with tribal land, military bases or other tax-exempt lands within their boundaries.
A $20 million transfer from the new “early childhood trust fund” created in the 2020 legislative session to expand the number of prekindergarten slots statewide and provide home visiting services to an additional 1,700 or so New Mexico families.
The one-time major expenditures of $600 million would come from drawing down New Mexico’s mandatory cash reserve fund. Notwithstanding the drawdown, there will be upwards of $1.8 billion left in cash reserves which is 25% of total state spending.
COURT RULING ON EDUCATION REVISITED
The additional $80 million and $60 million for education is a direct result of the 2018 state court actions of Yazzie v. State of New Mexico and Martinez v. State of New Mexico where the state was sued for failing to provide public school students with a sufficient education as mandated by the state’s constitution. The lawsuit challenged the state’s arbitrary and inadequate funding of public schools as well as its failure to provide students with the programs and services needed to be college, career and civic ready. The lawsuits alleged that the lack of necessary monitoring and oversight deprived students of the resources and services they need to succeed, particularly low-income, students of color, including Native American, English-language learners, and students with disabilities.
ANOTHER COVID RELIEF PACKAGE POSSIBLE
On November 24, Governor Michelle Lujan Grisham called a one-day special session as the state was confronting spiking COVID infection and death rates. New Mexico received more than $1.2 billion under the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act). On Tuesday, November 24, the New Mexico lawmakers passed a bipartisan coronavirus relief bill that provided a onetime $1,200 check to all types of unemployed workers and up to $50,000 for certain businesses.
The total approved expenditure was for $330 million and a total of $319 million was unspent funds the federal CARES relief funding previously assigned to New Mexico. An additional $10 million in state general funds were allocated for Covid 19 testing and tracing efforts.
The Special Session bill allocated $100 million to support businesses with 100 or fewer employees. The New Mexico Finance Authority distributed the grants which were up to $50,000. Businesses in the hospitality and leisure industry, which are the businesses severely harmed financially by New Mexico’s public health orders, would were given priority.
Another new COVID-19 relief package could also be passed during the opening days of the 60-day 2021 legislative session that starts January 19. Top-ranking Democratic lawmakers have said it could include expanding a tax break for low-income families and other measures. The new COVID-19 relief package could be passed early in the legislative session. It could include expanding a tax break for low-income families and other measures.
WHAT NOT INCLUDED IN THE BUDGET
The $7.3 billion budget recommendation for the fiscal year that starts July 1 would not provide salary increases for state employees and teachers, but some State Police officers could get raises under an already approved plan.
The Governor’s proposed budget does not include more funding for road construction and repairs around New Mexico.
AVOIDING MAJOR BUDGET CUTS
The Governor’s overall proposed budget avoids major cuts primarily because Governor Lujan Grisham in September ordered state agencies to prepare for 5% spending reductions in the 2021 Legislative session. The state’s revenue streams have improved due to federal relief measures and a modest rebound in oil and natural gas prices, making major budget cuts unnecessary.
In a statement released, Governor Lujan Grisham described her budget plan as fiscally responsible and she said it would maintain funding for necessary state programs and services. In the released statement, Lujan Grisham had this to say:
“Amid great adversity, I recommend a fiscally responsible budget while maintaining essential funding for our public education moonshot, for the innovative economic diversification and opportunity New Mexicans expect, for the community, public safety, and much more. … The pandemic and economic uncertainty may have disrupted our forward momentum in job creation, child wellbeing improvements, and various other policy emphasis areas, but we are ready to bounce back quickly and robustly. This budget recommendation is our first step to position New Mexico to prosper in a post-pandemic world.”
Links to related and quoted news coverage are here:
GOVERNOR LUJAN GRISHAMS MAJOR LEGISLATIVE PRIORITIES
On Wednesday, January 13, a mere 5 days before the 2021 New Mexico Legislative session begins, Governor Michelle Lujan Grisham outlined her legislative priorities that she wants the legislature to enact.
According to a written statement issued by the Governor, her legislative priorities in a nutshell are as follows:
1. The legalizing recreational use of marijuana for adults. This failed in the 2020 session and has a good chance of passage in the 2021 session. Lujan Grisham has said in the past legalization of marijuana will create a new industry and could boost state revenue and promote job creation.
2. Repealing the state’s 1969 anti-abortion law, now largely unenforceable because of the 1971 United States Supreme Court case of Roe v. Wade decision in which the Court ruled with a 7 to 2 decision that the Constitution of the United States protects a pregnant woman’s liberty to choose to have an abortion without excessive government restriction. Now that the Supreme Court has a 6 to 3 conservative majority the chances that the US Supreme Court will reverse Roe v. Wade have increased dramatically. If that happens New Mexico’s 1969 anti abortion bill will once again become law. The repeal attempt failed in the 2020 session, but has a better chance of passage in the 2021 session.
3. Establishing a “clean fuel standard” to reduce emissions.
4. Boosting distributions out of New Mexico’s largest permanent fund to expand early childhood programs. The legislation is a proposed constitutional amendment that would also require voter and congressional approval.
5. Revising the state procurement code to promote spending within New Mexico and to help businesses owned by Native Americans, minorities and women to secure state contracts and to promote spending within the state.
6. Liquor license reform efforts. Lujan Grisham wants to provide a lifeline to restaurants by allowing alcohol delivery and broadening the state’s tightly controlled monopoly on liquor licenses.
7. Urging lawmakers to support budget changes aimed at delivering more money to school districts that serve low-income communities.
8. Overhauling a state program that provides loans to small businesses and nonprofit groups struggling amid the pandemic.
COMMENTARY AND ANALYSIS
As a result of the 2020 election, Democrats maintain substantial majorities in both the New Mexico House and Senate. Eleven of the Senate’s 42 members will be new and it will be their very first legislative session under new leadership. The biggest change that resulted from the 2020 elections is that primary challengers ousted some of the Senate’s long time and conservative Democratic leadership.
For decades, a conservative coalition of 5 conservative Democratic Senators along with conservative Republican State Senators controlled the New Mexico Senate. The 2020 June primary toppled the most powerful legislators of them all in Senate: Finance Committee Chairman John Arthur Smith and Senate President Pro Tem Mary Kay Papen. Clemente Sanchez of Grants, and Senator Gabe Ramos of Silver City, and Richard Martinez of Espanola were also voted out of office. Of the five conservative Democratic State Senators targeted by progressive groups, only Gallup’s George Munoz survived.
The change in the Senate make up has resulted in a clearly more progressive chamber. The NM Senate was often referred to as the chamber where House progressive legislation went to be killed and die. As a result of the defeat of the 5 conservative Democrat Senators, the authorization and taxation of recreational cannabis, the repeal of the state’s 1969 anti-abortion law and a proposed constitutional amendment to tap more money for education from the state’s permanent state trust fund for education is now better than ever. All 3 of the initiatives were always opposed in one form or another by the 5 conservative Democrat State Senators.
Not surprisingly, the Governor is placing a major emphasis on economic recovery and education. The emphasis on economic recovery is no doubt associated with the impact of the corona virus on the state’s economy and the decline in oil and gas production revenues that resulted in a special session two months after last year’s session to deal with a major deficit. The emphasis in education is no doubt related to the landmark state court education ruling of Yazzie and Martinez where the state was sued for failing to a basic education in reading, writing and math to students.
Based upon the Governor’s proposed 2020-2021 budget as well as her priorities for the 2021 Session, and changes in the Senate leadership, the 2020 New Mexico legislative session promises to be another consequential session that will have a major impact on the state for years to come.