ALBUQUERQUE, N.M. (KRQE) – New Mexico lawmakers and Governor Michelle Lujan Grisham are preparing to a more than $2 billion budget hole as lawmakers are expected to meet for a special legislative session next week. While much of what to keep and what to cut is still being hashed out, it’s now expected that the state will lean heavily on reserves to fill the shortfall.

The governor’s executive team and lawmakers in the Legislative Finance Committee met separately Wednesday to discuss the status of the state’s current and next fiscal year budget which has suffered from the coronavirus economic shutdown and plummeting oil revenues. The state is projecting a $375 million revenue loss for the current budget year and a $1.976 billion revenue loss for the Fiscal Year 2021 budget beginning in July 2020.

During a Wednesday news conference, Governor Michelle Lujan Grisham discussed her administration’s recommendation of using $193 million in reserves to in-part cover the current budget shortfall. The governor’s office is recommending using $873 million to in part plug 2021 the fiscal year 2021 budget.

“It’s smart, it’s effective and that’s why you have reserves so that you don’t collapse your entire operational system because you weren’t prepared for a rainy day,” said Democrat Governor Michelle Lujan Grisham. “We’re prepared and I think that legislators are going to feel like this is responsible investing in our futures and a good solvency plan.”

In a separate meeting of the Legislative Finance Committee Wednesday, lawmakers reacted to the projected budget shortfall, the use of reserves, and suggestions as to what to cut. Vice-Chair of the Legislative Finance Committee, Patty Lundstrom expressed support for some of the changes being considered.

“I’m pretty happy with we’ve come up with, we’ve been working on this for the last couple of months,” Rep. Lundstrom said.

Alongside the use of roughly $800 million in reserves, lawmakers are expected to use about $725 million of Federal “CARES Act” stimulus funding to help close the budget gap. However, budget cuts are also expected.

The governor’s office is proposing cutting spending in most state departments by 4% and reducing raises for most state employees outside of public education from 4% to 2%. Lujan Grisham’s administration is also eyeing a possible 2% budget cut for public education and schools, including reducing the previously approved teacher raises from 4% to 2%.

The fine details are expected to be hammered out in the upcoming special session that’s slated to begin next Thursday, June 18 in Santa Fe. Some possible disagreement over what to cut was highlighted in the Legislative Finance Committee Wednesday. When discussing capital outlay cuts, a Democrat from Bernalillo County, Representative Javier Martinez raised concern over the possibility of most of the cut projects coming from Bernalillo County.

“It’s a big lift for us to carry and looking at that list, there are parts of the state that are not losing any capital outlay, certainly not in the way we [Bernalillo County] are, so I’m just putting that out there for you guys to think about,” said Rep. Martinez. “With the economy of Albuquerque, that’s where the rest of the state is going to go, I mean, at this point we are the economic engine, it’s not the southeast anymore, it’s us.”

If the state uses nearly $800 million in reserves to help fill the budget gap, as the governor’s office has outlined, that would leave the state with nearly $900 million in reserves. That would represent around 12% of the state’s recurring budget.

Read the Framework for June 2020 Special Session: