New Mexico will cancel 115 state-funded construction projects and refinance others to close a major budget gap, under a solvency bill signed on Friday by Gov. Susana Martinez.
The Republican governor approved the plan shifting almost $90 million to state operating reserves by canceling local construction projects authorized in 2013 and 2014 that never broke ground. Payment for other projects would be shifted from the state’s overburdened general fund to severance tax bonds.
The canceled projects across the state include improvements to a Navajo reservation chapter house, senior centers, railroad crossings, roads, irrigation ditches, playgrounds and an airport hangar. Martinez used her veto pen to spare four projects, including $564,000 in state funding for a welcome center at the National Hispanic Cultural Center in Albuquerque and $588,000 for permanent museum at Indian Pueblo Cultural Center in Albuquerque. The canceled projects would have cost about $11 million.
Lawmakers approved a package of solvency bills this month during a special session to help address a nearly $600 million operating budget deficit. Martinez is considering proposed legislation to cut state agency spending by $171 million.
New Mexico’s budget woes are linked to a downturn in energy markets that has taken a bite out of taxes and royalties from oil and natural gas production and sent shock waves through the economy. The plan if left intact would restore depleted state operating reserves to about 1 percent of annual revenue stream. Operating reserves stood at over 11 percent last summer. It is unclear whether minimal account balance will be enough to satisfy credit rating agencies. Moody’s Investors Service is reviewing the state’s finances for a possible downgrade to debt ratings, a move that would increase borrowing costs.
The governor already signed bills that would close tax loopholes, tap into reserves from a tobacco settlement fund, sweep together idle funds from various government accounts.
The Legislature proposed 5.5 percent budget reductions at most state agencies. Public school funding would decrease by 3.3 percent, with an emphasis on paring administrative costs. The Public Safety and Children, Youth and Families department would be exempt from cuts.
State law includes prohibitions against deficit spending, including possible fines and even prison time for a state treasurer or secretary of finance who knowingly spends beyond fund balances.
