- Associated Press - Tuesday, February 2, 2016

SANTA FE, N.M. (AP) - Legislative leaders in New Mexico’s House of Representatives are preserving pay increases for police and prison guards and trimming funding for higher education as they redraw next year’s state budget to offset falling revenue projections.

The House Appropriations and Finance Committee on Tuesday voted to move forward with about $82 million in spending increases with no new taxes during the fiscal year that starts in July. That’s a far cry from the roughly $230 million spending increase recommended two weeks ago by Republican Gov. Susana Martinez.

State financial analysts last week slashed revenue expectations for next year by over $200 million, leaving just $30 million in new money for lawmakers to expand spending above this year’s $6.3 billion budget.

Lawmakers want to spend an additional $52 million by sweeping together leftover cash and savings across state agencies, as well as by tapping money stockpiled by the state from legal settlements in the Consumer Settlement Fund.

The budget plan would increase spending by $38 million to offset the rising costs of Medicaid health care for the poor and disabled, relying partly on transfers from state tobacco settlement funds.

Starting next year, New Mexico begins paying a 5 percent share of costs linked to the expansion of Medicaid to low-income adults, which has added more than 230,000 state residents to Medicaid rolls since 2014. To meet that obligation, lawmakers are seeking a $20 million transfer from the University of New Mexico Health Sciences Center.

Gone from the newly drafted budget are base-salary increases for new teachers recommended by the governor. The plan includes $8.5 million, however, for targeted bonuses and stipends intended for top-performing educators.

Public school funding would increase by $32 million - a 1 percent bump - with scaled-back funding increases for early childhood education programs and reading initiatives. Funding for state colleges and universities would be reduced by $3.4 million.

State police would receive $1.25 million to partially pay for the third phase of a pay increase plan, with the remainder coming from Public Safety Department savings.

The budget plan increases funding to the Corrections Department by $12 million, or just over 4 percent, to accommodate pay increases for prison guards and supervisors and to offset increasing medication costs to treat inmates for hepatitis C.

Democrats on the committee warned against using leftover cash balances and other non-recurring funds to pay for budget increases, saying it may make it harder to sustain state programs in the future.

Rep. Patricia Lundstrom, D-Gallup, compared the practice to building a bridge without a foundation.

“I believe it’s creating a major hole for these existing programs,” she said. “We’re creating a structural problem for next year (2018) to the tune of about $52 million.”

Legislative Finance Committee staff director David Abbey said it’s generally best to avoid using nonrecurring funds for general fund programs, but the state is forecasting a 5.6 percent increase in revenues for fiscal year 2018.

Rep. Larry Larranaga, the Republican chairman of the appropriations committee, offered reassurances that the one-time spending was responsible and necessary to meet increased needs for education, Medicaid, child welfare, prisons, public safety and jobs programs.

“When we put $32 million in education alone, that means we spent all of the new money,” he said. “There are a few minor holes in this in using one-time money. That’s not a large amount.”

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