Legislators say furloughs, reserve funds possible options for state budget deficit

There are plenty of budget questions when the New Mexico Legislature goes into a special session Oct. 17.

But there aren’t easy answers, local legislators say.

“No agency wants to be cut, no department wants to be cut,” Senate Minority Leader Stuart Ingle, R-Portales, said, “but we’re close to $700 million in the red”

Lawmakers expect to receive an updated revenue forecast next week that will set the deficit reduction target for the session.

There’s no agreement yet on a deficit reduction package. However, Gov. Bill Richardson said he and lawmakers have agreed that tax increases will not be considered during the special session.

The state currently faces a revenue shortfall of at least $433 million. But some lawmakers such as Sen. John Arthur Smith, D-Deming, expect the deficit has grown to $550 million or more because of a continued weakening of the state’s economy.

“ It’s growing, almost by the day,” Rep. Joe Campos, D-Santa Rosa, said. “The serious issues are trying to hold down costs and expenses, but to try not to harm education and Medicaid as much as possible.”

Rep. Keith Gardner, R-Roswell, said the budget problems have been a collection of government branches not working in anticipation of budget problems — including increases to state spending when there was an expected decrease in revenues, and fixing ongoing problems with non-recurring dollars.

The aim for cuts to state government, Ingle said, is not to lay anybody off. But furloughs may be a necessary choice. He’s hopeful New Mexico won’t have to take steps similar to those in Hawaii, where teachers voted for 17-day furloughs to avoid layoffs.

“Every department, every agency’s going to have to take something,” Ingle said, “the Legislature (and Richardson’s cabinet) included.”

Gardner thinks cuts need to be made across every department, but he fears a disconnect when it comes to hot-button issues like education and Medicare.

“I don’t think education and Medicare aren’t without waste that we can cut. We were saying that before there were budget issues. Explain to me, are we getting our bang for our buck? We need to sit down and have a discussion without emotion and politics.”

Sen. Clint Harden, R-Clovis, said one of the best ways to help education is to reduce restrictions on maximum class sizes, and to make sure the department doesn’t cover holes in 2010 with federal stimulus dollars that won’t be available in future years.

The one thing the Legislature can do, Harden said, is free up money from reserve accounts — which are normally maintained at about 8 to 9.5 percent of the overall budget.

That’s something Campos agrees on. He said the reserve funds are often referred to in good years as “rainy day” money.

“This,” Campos said, “is obviously a rainy day.”