[LWVNM Action] Fwd: SPECIAL SESSION State Budget Discussion Update
Richard Mason
polirich at aol.com
Thu Jun 11 12:12:29 MDT 2020
-----Original Message-----
From: Senator Liz Stefanics, District 39 <senatorlizstefanics at gmail.com>
To: polirich at aol.com
Sent: Thu, Jun 11, 2020 10:59 am
Subject: SPECIAL SESSION State Budget Discussion Update
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| SPECIAL SESSION State Budget Discussion Update - June 10, 2020
Yesterday afternoon, the Legislative Finance Committee met for several hours to consider the actions to propose next week for the state budget in the special session. Many people have been out of work, businesses have been closed, and children have been learning from home. It has been hard on individuals and their families, on private business, but also on the government that provides services to its citizens. The intent of the special session is not to create more harm but to plug the holes until we get back to regular session in January of 2021.
General Fund Revenue Outlook
- On June 10, state economists reported a revised general fund revenue estimate for FY20 through FY22. Compared to the April update, the forecast is close to the mid-point of the April range.
- The baseline revenue estimate is a “U shaped” recovery scenario with a deep initial decline and significant economic recovery by year-end. A pessimistic scenario has an “L-shaped” recovery with greater job losses and slower recovery.
- The FY21 New Mexico oil price outlook is $31/barrel; FY21 oil production is predicted at 255 million barrels, down 28 percent; FY21 job losses in the L shaped scenario are 9 percent with 14 percent unemployment.
- The state was pretty well positioned to withstand severe economic and fiscal stress with expected FY20 general fund reserves at 26.7 percent. However, in hindsight, 7.5 percent general fund appropriations growth for FY21 was excessive
- FY20 general fund revenue is expected to fall about $375 million below forecast. FY21 general fund revenue is expected to fall $1.98 billion below the December forecast.
Solvency Measures
Given time and health constraints, the Legislative Finance Committee staff framework for a special session in June focuses on simple, straightforward, moderately austere options for FY20 and FY21. These include:
- Drawing reserves to 12 percent ending FY21;
- Cutting a portion of 2020 special appropriations;
- Switching some general fund capital appropriations, including transportation, to debt financing;
- Paring back or eliminating new general fund initiatives that are likely not sustainable in FY22;
- Reducing the 4 percent across the board pay increase by 3 to 4 percent, perhaps leaving enough to cover higher benefit costs and maintain take home pay;
- Sanding (cutting) most FY21 general fund appropriations 2 to 4 percent with the smaller reduction for schools, health and Medicaid; and
- Using Federal Funds, especially the $1.25 billion stimulus fund, to temporarily reduce general fund spending.
This approach will achieve general fund FY21 recurring savings of approximately 5 percent. The framework assumes passage of Federal legislation or regulatory changes to provide flexible use of $1.25 billion stimulus funding; contingent language could allow use of more general fund reserves if this doesn’t materialize.
Significant non-recurring options remain available for FY22, notably capital outlay voids or swaps and use of the early childhood trust fund.
The Executive and Legislature will use the July to December period to develop additional recurring and non-recurring spending and revenue options needed for consideration at the 2021 Legislative Session.
Outcome
The Legislative Finance Committee approved several actions at their meeting to recommend for next week’s special session.
- Federal stimulus funds for COVID – 19 will be moved into Schools, Higher Education, Public Health and Public Safety.
- A low percentage will be sanded (cut) from all state agencies.
- The pay increase will be lowered to only cover health insurance increases.
- All of the Tobacco Settlement funds will be used for the budget and the Opportunity Scholarship will be eliminated.
- Some road funds will be cut and the rest will be replaced with debt financing.
- The Early Childhood Fund will be cut by a small amount but will continue forward.
- Capital projects of 2019 and earlier that were funded with general funds and never started will be reverted.
In other words, there will be swaps and sanding (cutting) to get the state out of the woods.
The NM State Senate wishes to protect their members and the public from the virus. Measures are being put into place to keep everything clean and distant – therefore the Senate’s intent is to have a very short session of 1 – 2 days.
As always, I am happy to hear from you – about your issues and concerns. Please contact me at lstefanics at msn.com
PLEASE SHARE THIS NEWSLETTER WITH YOUR FRIENDS AND NEIGHBORS.
IF YOU WISH TO UNSUBSCRIBE YOU CAN DO SO BELOW.
If you are not already subscribed but wish to do so click here..Sincerely,
Senator Liz Stefanics
District 39
http://www.senatorlizstefanics.com
Paid for by Friends of Liz Stefanics, Thomas A. Romero, Treasurer |
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| Copyright © 2020 Senator Liz Stefanics, All rights reserved.
You are receiving this email because you care about New Mexico's rural communities and towns—and leadership in Santa Fe that we can trust.
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Senator Liz StefanicsPO Box 720Cerrillos, NM 87010
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