Lawmakers eye quick special session

A state senator whose district encompasses much of Quay County said spending cuts to address a state budget deficit won’t be too difficult during this week’s legislative special session, but he fears tax increases might be likely within the next two fiscal years to address that shortfall.

State Sen. Pat Woods (R-Broadview) said he doesn’t expect too much acrimony from lawmakers when they meet Thursday at the Roundhouse in Santa Fe to tackle an estimated $2.4 billion loss of revenue over two years caused by plunging oil and gas prices, plus an economic recession, that are fueled by the coronavirus pandemic.

“I think they’ll hardly touch anything, just move some (budget) items from one to another category,” Woods said during a telephone interview. “The sad part is they’re not going to take any hard look at loss of revenue. We probably can get through 2020 and 2021, but by 2022 there’s going to be such a deficit that the only way to keep spending at that level is to raise taxes.”

Woods said some Democratic lawmakers want to eventually institute tax increases, de-emphasize revenue from the oil and gas industry and use those revenues for infrastructure improvements.

“There’s a school of thought we don’t kneed to cut services; we need to raise taxes,” he said. “Businesses are just starting to recover from this coronavirus. I don’t know how businesses can afford it.”

Woods, whose 7th District also includes much of Union and Curry counties, said the reluctance by the New Mexico Legislature to make big spending cuts is because it’s an election year.

“We don’t want to make hard choices before an election,” he said. “We want to make everybody think everything’s just fine and we can keep spending money like we’re spending.

“Nobody wants to make the hard cuts,” Woods later added. “Nobody wants to be on the chopping line.”

One item on the chopping block, however, is a 4% raise to state employees, including schoolteachers. Woods said lawmakers likely would trim that to simply covering a rise in health-insurance premiums, or about 1%.

The Albuquerque Journal reported last week the Legislative Finance Committee is proposing no salary increases or a 1% raise for teachers and state employees. Gov. Michelle Lujan Grisham proposes a 2% raise. Both sides have proposed state agency spending cuts by somewhat similar amounts.

Woods said Lujan Grisham already has trimmed the budget somewhat by vetoing some capital-outlay projects and a freeze on state payroll.

“She’s pretty much stopped hiring right now,” he said. “It’s the least painful way … having everyone pick up a little more of the load.”

Down the road, Woods said he’s very concerned about the state’s unemployment insurance fund, which he said he’s heard would run out of money by October at the current rate because of all the layoffs during the pandemic.

State Rep. Jack Chatfield (R-Mosquero), whose District 67 encompasses Quay, Harding and Union counties and part of San Miguel, Curry and Colfax counties, agreed with Woods’ assessment that lawmakers won’t make hard choices on the budget until early next year.

“I think we overspent during the regular session, but we have enough in reserves and pulling back especially non-recurring expenses will pick up some of the slack,” Chatfield said during a telephone interview.

“That will get is through the next regular session, where the more serious decisions will have to be made.”

Chatfield said he thinks “everything’s up for grabs” when budget cuts are discussed in January.

“It’s going to be a tough deal to come out of this coronavirus when we’ve shut down the entire economy,” he said. “People around the nation have quit traveling, so the price of oil and gas has just gone into the pit. It’s a double hit for the state of New Mexico.

“I hate that our source of revenue is only oil and gas, but that’s what it is. Of course, your tax base has dropped off because of all the businesses that were closed. We’re going to have to hustle to get out of this thing, and it’s going to take all of us working together.”

The governor also has said she wants to deal with other issues during this week’s special session, including a $500 million aid package from the state’s Severance Tax Permanent Fund for businesses and grants for local governments and tribes, all of which have been hit hard financially by the pandemic.

Woods said he was receptive to the aid package after hearing from two constituents whose businesses had suffered during the pandemic.

“After the shutdown, she had a hell of a time,” Wood said of one business owner. “She had to borrow money from friends. I asked her about this deal. … She said it would help her out. The money we’re taking it out of, we’re lending it out anyway.”

Chatfield said he’d be skeptical about the aid proposal until he read it.

“I’d have to see the bill to see how you can take more money and give it to small business. I’m a little doubtful,” he said. “I’m all for helping what you can, but in the end someone has to pay for it. Right now, I don’t know where they’re going to pull it from.”