- Associated Press - Wednesday, January 18, 2017

SANTA FE, N.M. (AP) - The New Mexico state Senate approved a package of budget solvency bills Wednesday as lawmakers rushed to fill a lingering financial gap for the current year.

The House of Representatives is likely to vote Thursday on the plan to close an $80 million deficit for the fiscal year ending June 30. The bills would replenish the state’s general fund reserves to at least $165 million, or nearly 3 percent of annual spending, by taking money from other areas of government.

“Right now we are dealing with a crisis situation. We’re in the red right now,” said Rep. Patricia Lundstrom, D-Gallup, chairwoman of the House Appropriations and Finance Committee, urging approval of the bills. “We have a lot at stake here. Are we writing bad checks? Are we lowering our bonding capacity? That really hurts local governments.”

Turning the page on the current-year deficit will allow lawmakers to start mapping out a spending plan for the fiscal year starting on July 1, when new cuts to agency spending are proposed. The budget crunch is closely linked to a downturn in the oil and natural gas sectors that has sapped tax revenues.

Broken into four categories, the plan would reduce program spending at public school districts throughout the state by 2 percent, saving the state $50 million. School districts are expected to offset the one-time cuts using a portion of cash reserves, cumulatively estimated at $250 million.

A competing proposal by Republican Gov. Susana Martinez would have swept much more from school district reserves - $120 million. The Legislature set aside the governor’s proposals to reduce take-home pay to teachers and state workers by cutting government contributions to pension plans, though the plan could be revived in the coming budget year.

Leaders of teachers unions expressed relief.

“The Legislature was in the position of choosing something really bad and something really horrible,” said Charles Goodmacher, a spokesman for the National Education Association of New Mexico.

Other major solvency provisions would:

- Shore up the general fund with as much as $88 million by spending insurance premium tax revenue as it is collected in the current year, rather than gathering funds to spend the following year. Those provisions will affect the flow of money to volunteer fire departments and to local law enforcement agencies.

- Sweep cash balances from various state accounts into the state general fund, and make additional spending cuts to programs. Money would be taken from performance-based public school initiatives, a rural infrastructure revolving loan fund, and water and waste-water projects. Republican lawmakers are objecting to reductions to money for an economic development fund to attract new businesses to the state.

-Cancel or postpone at least $8 million in spending on local infrastructure projects, freeing up money to funnel to the general fund.

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