Governor restores education funding

New Mexico’s governor last week used her veto pen to delete about $30 million in spending cuts — mainly for education — from a revised budget passed by the Legislature during a June special session.

Before signing House Bill 1, Democratic Gov. Michelle Lujan Grisham restored funding slated for culturally and linguistically relevant instructional materials, the Opportunity Scholarship initiative that provides free tuition to two-year colleges and the new Early Childhood Education and Care Department.

Lujan Grisham also halted cuts to economic development and election programs.

The revised budget for fiscal year 2021, which began Wednesday, totals $7.22 billion, down from the $7.6 billion plan approved in February.

Overall, recurring general fund appropriations were cut by about $415 million for fiscal year 2021, and non-recurring general fund appropriations were reduced by about $102 million in FY 2020 and $184 million in FY 2021.

State reserves in the revised budget stand at 11.3%. Reserves previously were at 25% before the pandemic.

“My administration has from day one emphasized the importance of expanding the state’s reserves; I am glad to have done that work on the front end because it has given us needed flexibility as we move forward,” Lujan Grisham said.

Two Quay County lawmakers, state Sen. Pat Woods and state Rep. Jack Chatfield, both Republicans, voted against the revised budget, saying the cuts weren’t large enough and that the state faces deeper cuts during the next legislative session in early 2021.

The governor used $750 million from the federal CARES Act coronavirus relief bill for revenue backfill in the new budget.

The governor allocated money from the federal legislation to provide $140 million for COVID-19 direct expenditures in the state, $150 million for city and county grants and $28 million for tribal government grants.

Teachers will receive 1% pay raises, down from the 4% approved in the February session.

State revenue plunged because of a coronavirus-fueled recession, plus a steep drop in oil prices from of a Saudi-Russia price war. The revenue shortfall is estimated at $2 billion.

House Bill 1 authorizes the Department of Finance and Administration to reduce state agency budgets an additional 2% if general fund revenue proves insufficient.

Lujan Grisham last week also signed House Bill 6, which provides tax relief for people, businesses and local governments strained by the pandemic.

The bill temporarily waives interest and penalties on late tax payments so individuals and businesses that have been unable to make timely payments will not fall further into tax debt. Taxpayers must still file their tax returns in a timely manner, but payment may be made at later date.

The bill also doubles state gross receipts tax distributions from online sales that municipalities and counties will receive in the coming fiscal year from $24 million to $48 million. Distributions will be divided among counties and municipalities based on population and may revert to the lower level if the federal government provides additional aid to local governments during the fiscal year.

The bill also exempts CARES Act payments to certain New Mexico healthcare providers from gross receipts taxes so more of the money can be used for direct services to residents who need health care.