b'2020 State ReportNEW MEXICO Petroleum Marketers Association (NMPMA) ReportNM we have seenall New Mexicans. Advocates, legislators, and In just about six months, a 1.2 billion dollar surplus go to a 1.5 billionagency directors are going to have to see the dollar deficit with a slaughter of the economybig picture and recognize that special inter-and the price of oil falling to record lows. ests are not the only interests.Senator John Arthur Smith, Chairman of theAccording to the LFC Newsletter for April, Legislative Finance Committee, said, JustFund swaps, agency budget sanding, and about a month ago, we started to get hintscanceled capital outlay projects were among about how bad things were going to get. Newthe approaches used to balance state budgets Mexico reported its first COVID-19 case andduring the Great Recession and the last oil oil prices imploded. Rough estimates of theprice collapse, LFC records show. financial loss to the state were in the hundredsThe Legislature entered the 2009 legislative of millions, and it was clear the Legislaturesession, impacted by the worldwide recession would have to meet in special session to cutand plummeting fossil fuel prices, with a pro-back planned spending for the 2020-2021jected shortfall for FY09 of about $500 mil-fiscal year. lion and little authority to pull from general Then it got worse. COVID-19 cases doubledfund reserves, the committees post-session in days. Thousands of small businesses werereview says.forced to shut down and lay off their employ- In response, lawmakers canceled tens of ees. The stock market took a fast, cliff-divingmillions of dollars of capital outlay projects, plunge. Estimates of losses to the state grewsanded 1 percent from appropriations to Med-past $1 billion and planning for a specialicaid and the public schools and cut spending session became more urgent when forecast- 5 percent for the rest of state government, and ers questioned whether the state could makereinstituted estimated corporate income tax it to June in the black. Its like were all in apayments. shared nightmare, and no matter how fast weDespite drafting a conservative budget for run, we cant gain any ground. FY10 during the 2009 session, deteriorat-Fortunately, New Mexico has had stronging economic conditions brought legislators leadership on the pandemic, and the Leg- back to Santa Fe in October. They cut state islature ensured we are financially betteragencies further, canceled additional projects, prepared than we were for either the Greatsubstituted state funds with federal stimulus Recession or the oil-bust crisis of just a fewfunds, traded lower employer contributions years ago. We stashed savings that will softento state pension plans for higher employee the landing; we set up endowments that willcontributions, and swept cash balances in spe-continue to cover some costs without the needcialty funds into the general fund. In addition, for the depleted general fund. We still need athe governor ordered a five-day furlough of special session before the end of this budgetstate employees.year, but we can wait a few weeks for circum- A collapse in oil priceswhich dropped stances, including federal aid, to settle. precipitously in late 2014, recovered slightly But make no mistake, New Mexico will facein early 2015, then hit bottom in early 2016some very, very difficult decisions. Without yetled the state to end FY16 in the red and drove knowing how deep this hole is going to get,three rounds of budget cuts for FY17. we must first make sure the state can pay itsDuring the 2016 session, legislators cut bud-bills. That will mean cuts, plain and simple.gets, swept cash balances, and drew down the Second, we must ensure healthcare is acces- general fund reserve. In an October special sible to all New Mexicans even as healthcaresession, the Legislature again cut budgets, services come under tremendous pressure,raised revenue partly by closing tax loop-and we must take care of the healthcare pro- holes, transferred more than $200 million from viders at the front lines of this unprecedentedthe tobacco settlement permanent fund into event. Finally, business owners and theirthe operating reserves, swept cash balances, employees are going to need help. Many ofand tapped the public school capital outlay these businesses and their jobs are not com- fund for instructional materials and transpor-ing back. We will need jobs, not just for thetation costs.displaced workers but for the business-lessWith the economy continuing to decline, business owners as well. This is a huge messlawmakers during the 2017 session were and its going to take effort and sacrifice fromagain forced to address solvency, with action during the third round of budget cuts includ-44 www.wpma.com / Summer 2020'