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Monday, January 10, 2011

Martinez Budget: 3% Cut Overall, Decreases in Auditor Funding, Film Tax Rebate, More

Republican Governor Susana Martinez today released her proposal for New Mexico's budget. (Click for a PDF of the 146-page document.) Of course I haven't had a chance to read it all, let alone digest it, but we do know that her proposal includes about a 3% cut overall according to the AP, and would spend about $5.4 billion to finance public schools, higher education and general government operations. It calls for spending cuts of $179 million. No employee furloughs are included. There's a 20% cut in exempt positions in government, or about $6 million.

In other areas, the Martinez budget proposes a 20% cut ($3 million) in the Public Education Department’s General Fund operating budget, saying that can be achieved by cutting bureaucracy, not classroom spending. There's $10 million more for Medicaid to replace federal stimulus funds, a 5.2% decrease in general higher education funding and $1.9 million cut out of the higher education operating budget.

The Martinez plan does not propose any tax increases, per se, but does require that state workers (except K-12 teachers and aides) kick in an additional 2% of their salaries for their pensions, while the state cuts its pension contributions by the same amount. Martinez claims that will save about $39 million next year. Public employees and teachers are already contributing about 1.5% more to their pensions thanks to the budget crafted in 2009. That reduction was supposed to be temporary, but it continues this year under Martinez's plan. 

State Auditor Budget Cut
In a move that's the exact opposite of what Martinez promised during the campaign, she's proposing a  8.8% decrease in the State Auditor's budget, according to the Democratic Party of New Mexico. In campaign mode, Martinez said:

“We must give the State Auditor as many resources as necessary to do an effective job,” Martinez is quoted as saying. “We should know where every penny of taxpayer money is spent. It is inexcusable that any government agency or organization goes unaudited and their expenditures unaccounted for. Properly accounting for expenditures should be a requirement for receiving additional appropriations.” [Denish, Martinez support more funding for state auditor, New Mexico Independent, Trip Jennings, 8/24/10]

That was then, this is now. The self-anointed heroine of government transparency and accountability apparently believes the Auditor's Office can manage with even less funding than it had in past, now that her administration is in control.

Auditor Hector Balderas has repeatedly called for more resources to do his job, while having to instead endure cuts greater than those for other agencies. In March of 2009, his agency's general fund was cut by 14%, with an additional 4% cut made during that year's special session of the legislature. As Balderas said that year, "In these tough economic times, it’s critical that every effort is made to protect New Mexico taxpayer dollars from financial fraud, waste, and abuse." 

This year, the operating budget for the agency is about $3 million and Balderas’ staff numbers under 30 people. Of those 17 or 18 are auditors, he said in an interview with the New Mexico Independent after Martinez and Dem gubernatorial candidate Diane Denish had agreed during a debate that every public school should be audited. Obviously that would take more staff and more funding. At that time, Balderas commented:

“Everybody publicly supports the concept of auditing,” Balderas said, noting that his agency has been cut more severely than the rest of state government. The cost-saving measures come at a time when his office has attempted to strengthen the oversight his office provides.

“We’ve been aggressive about informing the public, the media and the government of the great risks that are posed by not having more robust, aggressive oversight,” Balderas said.

Now, Gov. Martinez apparently is singing a different tune on the importance of auditing every school district given her push to cut already inadequate funding for the State Auditor. 

Film Industry Rebate Cut
As the Los Angeles Times reports, Gov. Martinez is also calling for a big cut in the film tax rebate program, proposing to reduce the credit from a 25% to 15%. Is this a wise recommendation when New Mexico is already squeezed for jobs? Advocates for the rebate program think not:

Supporters said the cut would effectively take New Mexico out of the running for Hollywood productions because its credit would be lower than what most other states now offer.

"Any kind of reduction, and particularly a 10% reduction, says New Mexico is now closed for business,'' said Dana Arnold, partner for Albuquerque Studios, which is scheduled to host the Marvel Studios superhero movie "The Avengers" in April. "In these tough economic times, we need to do everything we can to foster job creation, and a reduction in the film incentive program is not the solution to continued job creation."

January 10, 2011 at 07:50 PM in Economy, Populism, Education, Film, Government, Hector Balderas, NM Legislature 2011, Susana Martinez | Permalink


Cutting the auditor is penny-wise, pound foolish.
How does an agency like PED, handle a 20% cut? Will the cuts be wise or will dinosaurs stake out territory to the detriment of our schools?
So, the other agencies suffer a 3 percent cut? This does not seem fair. Where will the cut personnel find jobs in this economy?

Posted by: qofdisks | Jan 11, 2011 10:59:38 AM

Incredibly, but not surprisingly, Martinez's budget also includes a 21 PERCENT CUT to the Environment Department budget. That is a MASSIVE CUT and will be very damaging to the Department's work to protect New Mexico's air, land and water. What kind of a person thinks destroying our natural resources is "good for business"?

Posted by: barb | Jan 11, 2011 11:30:10 AM

She's cutting education even though she promised not to do it. Sure she gives an excuse that this will all be in "administration" but she gives no clues as to what that means. Does she believe a good education system can be run without administrators? Clueless.

Posted by: Teacher | Jan 11, 2011 1:51:29 PM

Barb - The 21.1% cut to the Environment Dept shown on pg 18 of the governor's proposed budget is of funds from the "General Fund". On pg 11, "Total Funds", the Environment Dept reduction is 3.3%. For the Environment Dept, the FY12 "Total Funds" budget is over nine times larger than the FY12 "General Funds" budget number. So the overall effect, adding the two "funds" together, is a 5.4% reduction ($122,808.9K to $116,228.6K)

Do not ask me the difference between the "Total" and "General" funds catagories. :-)

Posted by: Paul Lindsey | Jan 11, 2011 8:15:53 PM

Slicing and dicing the numbers doesn't help. The fact remains that there is almost 22% cut from the general fund that pays for environmental operations at a time when more funds should go there, not less. I wonder how much of the funds cited above are for legal fees to defend against the lawsuits that will be produced by Martinez taking the law into her own hands on regulations.

Posted by: Old Dem | Jan 12, 2011 10:08:33 AM

I've held off responding to the gratuitous "slicing and dicing" comment until I could learn more about the budget. I wasn't "slicing and dicing", just adding and dividing. You know, 4th and 5th grade math. Turns out I didn't need to do that, because the General Fund table is a subset of the Total Funds table.

Yes, there is a 21.1% reduction in the General Funds going to the Environment Dept, but the reduction in Environmental Dept's total budget is only 3.3%. Bluntly, a $3M cut in funds from a FY11 total budget of over $108M is hardly as "MASSIVE" cut that is "going to destroy our natural resources". The sky is not falling.

Posted by: Paul Lindsey | Jan 12, 2011 10:11:48 PM

Responding to the original article, the quote from then-candidate Martinez is null and void, because any estimates of what she would do to control state spending went out the window when the Richardson administration released a much higher revised budget deficit number AFTER THE ELECTION. It would be ridiculous for either Martinez or Denish to use their plans to correct a $250M for a new deficit estimate of $450M.

Posted by: Paul Lindsey | Jan 12, 2011 10:22:01 PM

"Where will the cut personnel find jobs in this economy?"

Newsflash: the purpose of government is not to provide government jobs.

Posted by: Paul Lindsey | Jan 12, 2011 10:26:01 PM

The Governor's FY12 budget recommendation:

I found the LFC FY12 budget recommendation, but it is not as detailed as the DFA's. I read somewhere that a more detailed version will be coming out later:

Posted by: Paul Lindsey | Jan 12, 2011 10:49:05 PM

Paul, the RIchardson administration did not release a higher deficit number after the election. The $200-plus million assumes the cuts made last year will be made this year, and the $400-plus million does not assume those cuts will be made. The deficit is the same -- in fact, the deficit estimate has gone DOWN by about $50 million since the campaign.
Martinez's claims that the deficit went up are the worst kind of deception -- or really bad ability to count.

Posted by: Mona | Jan 13, 2011 7:54:12 AM

From the ABQ Journal, Nov 11, 2010:


Posted by: Paul Lindsey | Jan 13, 2011 8:23:51 AM

I find it off putting when someone takes over an entire comments thread by repeatedly posting GOP talking points. Can you restrain yourself voluntarily, Paul?

The fact remains that the Enviro Depart was cut almost 22% in general funds. The two conflicting estimates on the budget hole were made with different assumptions. The lower estimate is proving to be the correct one this year because Martinez's total numbers are almost the same as the LFC's. She differs mainly in where she wants to cut.

Naturally, given her extremist views on regulations and environmental protections, she wants to cut big there to please her oil crony donors. Her proposed cuts for water system protections and infrastructure are plain crazy.

Newsflash-New Mexico's economy has always been dependent on government spending and always will be. Pretending otherwise requires a high degree of denial about reality.

Posted by: Old Dem | Jan 13, 2011 10:46:00 AM

The claim is that Susana Martinez didn't know how to count in determining the extent of the budget deficit. So, I've been looking for instances where Diane Denish or Gov. Richardson came out and said that the LFC-projected $260M budget deficit was too low before the election.

I have found ONE report on Oct 22 where Diane Denish states that she has plans to save $450M, but there is no explanation why.

In an Aug 26 interview, Diane Denish states that the deficit is $150M (and confirms the number, so it's not a typo).

Two days before Gov. Richardson released the $450M, Gov-elect Martinez met with him. According to this news report, the $260M deficit number was still on the table.

If someone wants to show me where Gov. Richardson or Diane Denish stated before the election that the LFC's $260M deficit number was wrong, then I'm all ears. Except Diane Denish's one mention of saving $450M that I noted at the top, I can't find anything else. You would think that if Diane Denish had a more accurate number for the deficit, she would have been beating Susana Martinez over the head with it like a dry salami in the campaign.

Posted by: Paul Lindsey | Jan 13, 2011 10:48:27 AM

Old Dem - I broke my comments into pieces to address different points, not "to take over the thread".

"Can you restrain yourself voluntarily" - do you really mean just go away and let this forum go back to being a cheering section?

As far as "extremist views" go, Diane Denish was not a fan of the statewide cap-and-trade program either, although strictly on economic grounds: That's the same argument Steve Pearce just made during a 15 minute radio interview Monday morning on KVLC; that the EPA's enforcement actions against the Four Corners coal plant and others should be reexamined because it will affect jobs in the coal mines. When I heard that, I shot off an email strongly objecting to his position.

The zeroing out of the Water & Wastewater Infrastructure Development line item in the General Fund category simply tells me that the Governor believes that the $9.9M that this line item is getting in toto is sufficient to do the job and that add'l funds from the General Fund are not req'd. You cannot look at just the General Fund table without looking at the Total Funds table.

Yes, NM's economy is dependent on Federal dollars, but no, it doesn't always have to be. NM needs to attract real businesses, businesses that do a value-add, not service industries like call centers. The purpose of state government is not to provide jobs for state workers. One of the goals of state government must be to be efficient with the money it receives, not to automatically staff an area or provide outlays at the same level just because that's the way it's always been done.

Posted by: Paul Lindsey | Jan 13, 2011 11:41:10 AM

Like most right wingers, Paul keeps saying the same thing even though his points have been countered. The LFC projections were made based on the continuation of certain measures that had been passed previously. Because there was no guarantee those measures would be continued with a new governor, the effects of the measures were taken out of the Richardson estimate. It's not rocket science. Estimates are fluid and vary over time and according to what is included or not. The fact is the projected deficit is NOT way bigger than the original LFC estimate, which is why the LFC budget proposal and Martinez's proposal are very similar.

I agree we need private sector jobs but in the meantime big cuts in government employees would hurt the economy here not help it. If Martinez's wants good jobs here she should shut up about the film industry tax rebates. The have created more than 20,000 jobs and will do even better when the economy nationwide rebounds. People should know that the film rebates return a quarter of the extra taxes paid by the industry so the state comes out ahead, not behind.

Posted by: Old Dem | Jan 13, 2011 12:18:09 PM

Old Dem - I'll agree that budget and deficit estimates change. The only time we know how much money was actually spent, not allocated, in any government is after the budget year is over.

"big cuts in government employees would hurt the economy here not help it" - Where's "here"? Santa Fe? If personnel reductions in Santa Fe can be made without effecting performance, then I'm all for it, especially since there are areas such as K12 education that can certainly use the money.

I don't know what the right answer is on the film industry tax rebates. State Sen Steve Fischmann (D-37), interviewed on NewsNM on Jan 10, said that the issue of tax rebates for the film industry needs to be examined, and that in general, tax incentives for all industries need to be reviewed, which I agree with. (FYI, I am not in Sen Fischmann's district, although who knows what will happen with redistricting.)

Posted by: Paul Lindsey | Jan 13, 2011 1:27:07 PM

Too bad Martinez isn't into looking carefully at the film tax rebate and other rebates and subsidies. She wants to cut the film rebate right out of the box and has proposed no cuts for any subsidies received by the industries of her lavish fossil fuel campaign donors. How much you wanna bet she'll have those oil guys fly her around in their jets too!

Posted by: Jan | Jan 13, 2011 2:39:36 PM

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