New Mexico Republicans want to use state retirement funds for state budget shortfalls
Leading Republicans in the New Mexico House of Representatives on Tuesday outlined a proposal to resolve the state’s budget crisis by suspending construction projects and withdrawing money from a state pension fund.
Democrats who hold the majority of seats in both chambers have yet to come forward with a budget plan for a special legislative session that begins May 24. Republican Gov. Susana Martinez has called lawmakers back to the capital to resolve a feud over how to solve the state’s budget crisis. She signaled her support Tuesday for the House Republican plan.
The governor last month vetoed all spending for the legislative branch and institutions of higher education for the fiscal year starting July 1, emphasizing her opposition to companion tax increases. Martinez has since indicated she would consider select tax revenue increases if they lower overall rates.
The House Republican budget plan would shift $63 million in capital outlay money to bolster the state general fund, said GOP House minority leader Nate Gentry of Albuquerque. It would also claw back $12.5 million in pension money set aside for the state’s unsalaried legislators.
Both ideas were discussed and spurned by the Legislature during its 60-day regular session that ended in March. Revenue forecasts issued in February show a projected $70 million deficit for the coming fiscal year if funding is restored to the Legislature and state universities, colleges and specialty schools.
“That reduces the need to impose new taxes,” Gentry said of Republican proposal. “That more than fills the gap.”
Gentry said legislative retirements are overfunded and can to be drawn down, while state pension managers have warned that would affect the larger retirement fund for state workers and be illegal.
The House GOP budget plan also slightly increases spending on student aid and the University of New Mexico Cancer Center.
The Democratic chairwoman of the House appropriations committee, Rep. Patricia Lundstrom of Gallup, said she has no objection to using capital outlay funds to shore up state finances, but that pension withdrawals would be illegal.
“That’s like someone going into your Social Security and taking money away,” she said.
Lundstrom said Democratic lawmakers still were working Tuesday on a budget proposal, and are in active communication with Senate Republicans.
New Mexico’s budget crisis is linked to a downturn in state tax revenues linked to oil prices and a weak local economy. State policymakers also are looking for ways to replenish general fund cash reserves that have been largely depleted, to protect the state’s credit rating and ensure low borrowing costs.
Republican Rep. Larry Larranaga of Albuquerque said Tuesday that he plans to reintroduce legislation next week to create a new rainy-day fund that sets aside state income from oil and natural gas during plentiful years.
Martinez wants a budget deal that includes comprehensive tax reform that would eliminate hundreds of tax breaks and lower overall tax rates on gross receipts. Many lawmakers fear the reforms could unintentionally undermine tax revenues.