- Associated Press - Saturday, January 21, 2017

SANTA FE, N.M. (AP) - The New Mexico House on Saturday advanced half of a budget solvency plan but deferred action on the plans’ other two bills until the coming week.

The House was in session Saturday as lawmakers worked to dig the state out of an $80 million budget hole and restore a modest financial cushion in the current fiscal year.

The House approved two of the four bills in the solvency plan and sent them to the Senate, which has approved its own versions. The Senate versions are similar but not identical to the House-approved bills. That means further Senate consideration is required.

The House then adjourned for the rest of the weekend after sending its versions of the other two bills back to committee and taking steps to allow consideration of the Senate’s versions of those two bills, possibly as early as Monday.

Earlier Saturday, the Democratic-led House rejected a Republican attempt to shift $63 million set aside for construction and other projects to the general fund so the money could be used to help shore up the state’s troubled finances.

Rep. Jason Harper, R-Sandoval, proposed the shift, saying the capital outlay money would better be used for education, law enforcement and child protection.

The House rejected Sandoval’s proposal Saturday, with Rep. Bill McCamley, D-Mesilla Park, saying the state should not stop “critical infrastructure projects” midstream.

Together, the solvency package would pump as much as $262 million into the state’s general fund by slashing spending at school districts, postponing infrastructure projects and tapping tax payments by insurance companies immediately instead of waiting for the next fiscal year.

The one-time fixes would ensure that New Mexico can pay its bills on time through the end of the fiscal year on June 30, and allow the Legislature to begin drafting a budget for the new fiscal year - when some new agency spending cuts are likely.

Depleted state reserves prompted a downgrade of the state’s credit rating last year.

One pillar of the plan would reduce spending at public school districts throughout the state by 2 percent, saving the state nearly $50 million.

Public schools would have to offset the one-time cuts using a portion of cash reserves, cumulatively estimated at $250 million. Exemptions would be provided for about a dozen schools with low reserves.

The Senate already approved a similar slate of solvency bills.

It called for transferring cash balances from various state accounts into the general fund, including money earmarked for merit pay for teachers and an economic development fund that rewards businesses that expand or move to New Mexico by offsetting infrastructure costs.

Other measures would postpone construction projects, freeing up money for the general fund.

Republican Gov. Susana Martinez previously proposed using $120 million directly from school district reserves to help close the state budget gap.

Lawmakers in the Democrat-controlled House and Senate have postponed work on policy initiatives as they try to close the books on the current fiscal year. The state constitution requires a balanced budget, and statutes make it illegal for the state finance secretary and treasurer to continue writing checks when it becomes obvious that the state has run out of money.

Agency spending was slashed by 2.4 percent during a special legislative session in October, without fully addressing the deficit.

On Thursday, the chief justice of the New Mexico Supreme Court warned that the state spending reductions are undercutting constitutional guarantees to a speedy trial and an adequate legal defense for poor people facing jail time.

The budget crisis is linked to a downturn in the oil and natural gas sectors that has sapped the state economy and tax revenues.

State economists say other bright spots in the economy - such as the health care and hospitality industries - also appear to be fading. New Mexico has the nation’s second-highest unemployment rate, at 6.6 percent.

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Davenport reported from Phoenix.

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