New $300 million state deficit

ALBUQUERQUE, N.M. (KRQE) - Just when Governor Bill Richardson and his Cabinet Secretaries say there's nothing left to cut, it looks like they need to cut more. KRQE News 13 has learned state lawmakers will hear Wednesday how the state is at least $300-million in the hole. That means the Governor and his replacement have some painful choices to make.

People just aren't spending what they used to. That's the big reason why the state won't be able to spend what lawmakers planned. Wednesday they'll hear new official revenue estimates showing the state in another big financial hole.

According to Legislative Finance Committee Chair Rep. Luciano “Lucky” Varela (D) of Santa Fe the state is between $30 and $40 million dollars short for the fiscal year (2010) that just ended a few weeks ago. That can be made up with reserves.

But it gets worse. Legislative Finance Committee Vice Chair Senator John Arthur Smith (D) of Deming expects estimates to show lawmakers over-budgeted by around $150 million for the fiscal year (2011) that just started July 1st.

That means Governor Richardson will have to cut across state government and it could mean more furloughs for state workers or even salary cuts and layoffs. The only thing off limits will be funding for Medicaid and the Developmentally Disabled.

Next year may be even worse. Lawmakers and the next Governor will have to come up with a way to cut at least $150 million more from the budget (2012) that kicks in next July.

“I know we can do it,” said Lt. Governor Diane Denish. “We can do it without touching education, without touching health care,” the Democratic nominee for Governor told News 13 Tuesday.

Denish believes she can save $465 million over the next five years by combining agencies, cutting exempt positions and offering early retirement incentives.

Republican Gubernatorial Candidate Susana Martinez responded to the same questions posed to Denish with a statement blaming the “failed Richardson/Denish administration” for these budget problems.

A statement from Martinez, the Republican nominee for Governor said she believes "we must solve this budget crisis by reducing spending and helping small businesses create more jobs to grow the New Mexico economy."