New Mexico aims for 5% reduction in annual state spending

Politics - Government

SANTA FE, N.M. (AP) – The administration of New Mexico Gov. Michelle Lujan Grisham is directing executive agencies to reduce annual spending obligations by 5% to help ease an anticipated budget deficit for the coming fiscal year.

Agency budget proposal are due Tuesday in an annual rite that provides time for legislators to outline a balanced budget before they reconvene in January.

A memo to state agencies obtained by The Associated Press calls for a 5% reduction in general fund spending levels for the fiscal year starting on July 1, 2021, compared with current-year obligations. That is in line with recommendation from the Legislature’s budget and accountability office.

Some exceptions apply. The administration says it will consider additional funding to services such as Medicaid health insurance that may experience population increases and may support permanent programs that lack a permanent source of revenue.

Finance officials are suggesting that state agencies delete staff positions that have been vacant for more than two years.

New Mexico has so far steered away from furloughs that were instituted in the wake of the Great Recession.

The Department of Finance and Administration “directed agencies to identify cuts that will not or will have limited impacts on core constituent services while maximizing savings wherever practical,” Valdez said in an email. “Maintaining operations throughout the state remains a top priority while we continue responding to the public health emergency.”

The state may also be able to forgo spending on rent and utility expenses at vacant offices at agencies where staff are mostly working from home because of COVID-19.

In June, state economists warned of a possible $990 million shortfall in general fund revenues for the coming fiscal year, to meet spending annual spending obligations of $7.4 billion.

New Mexico state government has tapped $750 million in federal coronavirus relief funds and is rapidly drawing down financial reserves that stood at $1.5 billion in June.

Copyright 2020 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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