- Associated Press - Thursday, July 21, 2016

SANTA FE, N.M. (AP) - A bipartisan alarm was sounded Thursday by state officials who say evaporating revenues could leave New Mexico scrambling to meet its spending commitments for everything from schools and public safety to health care over the next budget year.

A key state senator called on Republican Gov. Susana Martinez to order lawmakers back to Santa Fe this summer to fill an expected hole of close to $200 million in the budget for the fiscal year that ended in June.

The other concern is future spending, as revenues are not expected to keep up with spending plotted out under the current budget.

Sen. John Arthur Smith, a Deming Democrat who heads the Senate Finance Committee, warned that anywhere from $300 million to a half-billion dollars in revenue could fail to materialize and that state leaders need to address the problem soon rather than wait for the next legislative session in January.

“The volatility we’re looking at that created this is the roller coaster of oil and gas,” Smith said, pointing to the ripple effect caused in the state’s economy by tanking prices, resulting job losses and the effect the downturn has had on gross receipts and corporate taxes.

New Mexico is one of several states dealing with general fund revenue declines linked to energy production. For example, North Dakota has scheduled a special session next month to address a $310 million shortfall in that state.

Where some states have tapped rainy day funds or raised taxes, New Mexico has allowed its operating reserves to be virtually erased. The state also has swept small piles of cash from idle accounts and given state agencies authority to transfer funds between programs in an effort to cope.

State Treasurer Tim Eichenberg, a Democrat, said revenue data through the end of May shows collections aren’t meeting expectations and it’s unlikely the current budget can be supported due to the drop in revenues and the uncertainty about the duration of the oil and gas downturn.

“We are concerned and the situation needs to be addressed to ensure that critical functions of government are not interrupted - such as schools, police, prisons, health and human services, and payroll to state employees,” he said.

State Land Commissioner Aubrey Dunn, a Republican, said the drop in revenues from oil and gas and other activities on state trust land that help to pay for government services is noticeable.

Figures from the Land Office show the agency collected nearly $500 million in revenue for the fiscal year that ended in June. That marks a 32 percent reduction from the previous year.

Smith, Dunn and others warned earlier this year about the continued volatility of the oil and gas industry, one of New Mexico’s main economic drivers.

Despite the governor’s hard-line stance against tax increases, Smith said if revenues don’t pick up, New Mexico will be forced to consider a combination of tax increases and more cuts to balance the budget.

“I understand the political posturing - both D’s and R’s going into an election in the Legislature and the executive branch’s commitment - but somewhere calmer and common sense is going to have to prevail,” he said.

Budget leaders in the Republican-controlled House acknowledge the weak revenues but are awaiting final numbers - expected in August - before weighing in on the need for a special session to adjust future spending.

State officials say recurring revenues through May were at their lowest level in three years, with year-to-date revenues falling nearly 10 percent from the same period last year.

Agencies already are feeling the pinch, among them the Cultural Affairs Department. Admission fees at most of New Mexico’s museums and historic sites are increasing for the first time in years, hours of operation are being trimmed and a dozen staff positions are being eliminated as the agency deals with a more than $2 million shortfall.

The state Personnel Board on Thursday approved the agency’s plan to cut jobs despite the pleas of advocates who traveled hours to make the case for tourist attractions such as the Lincoln Historic Site that traces the history of Billy the Kid.

Department Secretary Veronica Gonzales told board members that the agency’s numerous divisions have come together to absorb the lack of funding and that the layoffs were unavoidable and painful.

New Mexico State University also is eliminating more than 120 jobs, many by not filling positions, as it deals with a $12 million reduction in its operating budget for the last fiscal year.

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