- Associated Press - Saturday, January 14, 2017

SANTA FE, N.M. (AP) - New Mexico lawmakers are preparing for financial triage as they convene Tuesday to mend a budget deficit and trim future spending without undermining basic government obligations to public schools, law enforcement and health care.

Legislators and state budget analysts describe a funding crisis of historic proportions for New Mexico, where a downturn in the oil and natural gas sector has sapped tax revenues and is likely to require another round of agency cuts to close current-year shortfalls.

With additional spending cuts proposed for next fiscal year, state courts and clerks already are limiting hours and scaling back compensation to jurors and witnesses. Public attorneys have begun refusing representation to poor defendants to keep pace with workloads. Historical sites and museums in the tourist capital of Santa Fe have trimmed hours and increased fees, and the state treasurer has canceled financial literacy classes at high schools.

Republican Gov. Susana Martinez has proposed public pension changes that would reduce take-home pay by 3.5 percent for more than 80,000 state workers and public school teachers.

The goal is to avoid furloughs, salary cuts or layoffs.

The pension contributions would be much less painful for employees, Finance and Administration Secretary Duffy Rodriguez told a legislative panel Thursday.

Democratic leaders argue the pension changes would aggravate already high turnover rates for social workers, nurses, police dispatchers and more.

“We have a lot of troubles filling vacancies now,” said Rep. Patricia Lundstrom, D-Gallup, a member of the House Appropriations Committee. “I would be very, very troubled.”

Teachers would shoulder most of the burden, according to figures from the Educational Retirement Board, which oversees pensions for about 60,000 educators. Under the average returning teacher salary, annual pension contributions would increase by $1,633.

The state’s dire financial picture is likely to color policy discussions about crime and punishment, marijuana laws, educational reforms, economic development incentives and more as state economists put a detailed price tag on the wish list for the 60-day legislative session.

Looming over state finances are plans by president-elect Donald Trump and the Congress to repeal the Affordable Care Act and restructure Medicaid. Nearly 15 percent of New Mexico’s 2.1 million residents have enrolled in Medicaid since 2014, with costs paid almost entirely by the federal government. The state will have to pick up more of the tab in the future.

Martinez has rejected any tax increases, opting instead for new efficiencies such as taxing gasoline at wholesale points rather than retail locations.

That has prompted concerns that budget cuts may further cramp the economy.

“She believes that we can cut our way to prosperity, and her proposal is a reflection of that philosophy,” said Sen. John Arthur Smith, D-Deming, chairman of the Legislative Finance Committee.

Politicians of all stripes emphatically want the state to attract new enterprises that can curb the state’s reliance on oil and gas revenues, which fund about one-third of the state budget.

Democrats who regained majority control in the House have declared job creation as the top focus, but they’ll have little room to spend on infrastructure projects or offer tax breaks.

“We need to find ways to encourage investment without spending public money,” said Rep. Brian Egolf, a Santa Fe-based attorney nominated as the next speaker of the House.

Egolf and over a dozen lawmakers embarked on a listening tour in December to gather new ideas for economic development from audiences in Las Cruces, Clovis, Hobbs and Carlsbad and Roswell.

Suggestions ran the gamut from more vocational training in high schools to incentives for businesses that can squeeze more value out of New Mexico crops and natural resources. Democrats are still refining legislative proposals.

Lawmakers also will explore reforming a tax code that has become riddled with loopholes.

A sweeping overhaul advocated by Republican Rep. Jason Harper of Rio Rancho would restore taxes on food to offset a major reduction in the state’s gross receipts tax on sales and services.

Also up for consideration, despite the governor’s opposition, are constitutional changes to legalize and tax marijuana and proposals to tax online sales by out-of-state retailers such as Amazon.

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