NEW MEXICO (KRQE) – While there are no cases of coronavirus in New Mexico, the state is feeling the effects of it in a way nobody expected. The virus is slowing down the global economy and crude oil prices are falling fast, all affecting New Mexico’s budget.
“With this veto, I have added these monies back into our reserves, which helps counteract the potential impact of fluctuations in the oil market,” said Governor Michelle Lujan Grisham in a statement.
Lujan Grisham’s first veto following the oil price drop cut $50 million originally meant for dozens of road projects across the state. Senate Bill 232 was sponsored by Senator John Arthur Smith, a Democrat who chairs the Senate Finance Committee.
“Well, obviously, that’s a disappointment because this money was targeted for local road funds,” said Smith.
The bill contained $100,000 up to $1.3 million for dozens of road projects in every New Mexico County. Including $1.3 million for the widening of Paseo Del Norte in Albuquerque, $195,000 to make sidewalks and roads more bike-friendly in Santa Fe and $900,000 from a $39 million project in Eddy County, which is building a relief route around the oil fields.
While many of the amounts cut are a fraction of the project’s total cost, it may still set long-awaited work back. The cuts come following a wild few days on Wall Street. As people change their routine out of Coronavirus concerns, the state’s biggest industry is being hit.
“So as people make decisions to reduce travel to, airlines cancel flights, as people work from home instead of traveling to work, our industry is impacted,” said Ryan Flynn, the President of New Mexico Oil and Gas.
The stock market plunged 7%, dropping oil prices to $26 a barrel, which the state relies on for its budget.”When you see people using less of your product than you will adjust your production to respond to that,” said Flynn.
Thirty-nine percent of the state’s budget relies on the oil and gas industry, which Republicans long said is risky.
“We were on the floor saying this is not sustainable, we are going to implode in the future, and I honestly thought it would be in the distant future but today when I saw the crash in the oil and gas, I’m really worried,” said Representative Jason Harper, a Republican who represents Sandoval County.
Smith is also concerned, saying this $50 million cut is likely just the beginning. “There’s another $150 to $200 million out there of low hanging fruit that I am encouraging the governor to take action on,” said Smith.
The governor has until Wednesday to sign off on the budget. The governor’s office says they are still considering other line-item vetoes but could not tell us a specific amount.