EDITORIAL: State’s budget deficit was no myth
Santa Fe New Mexican
By: Tom Clifford
June 7, 2014
Milan Simonich’s recent article, in which he claims the state did not face a budget deficit heading into the 2011 legislative session, is grossly inaccurate and deliberately misrepresents the challenges facing the Martinez administration upon assuming office (“Martinez spot wrong on deficit; book claims challenged,” May 21).
We should know. Between the three of us, we have nearly 60 years of experience with state budgets and state government finances. Two of us have served as Cabinet secretaries, two have worked as state budget directors, and one served as the Legislature’s chief economist. We’ve served in Democratic and Republican administrations, as appointees and as classified staff.
At the end of 2010, the Democratic administration under Gov. Bill Richardson did what every administration does near the end of each year — analyzed the extent to which revenues were projected to cover the state’s financial obligations. The picture was bleak. Revenues were down, and federal stimulus funds that had been used to patch holes in the budget were drying up. The Democratic administration said the state was going to be short roughly $450 million. Even after making numerous assumptions about what legislative action might be taken in the yet-to-occur 2011 legislative session, the Legislative Finance Committee projected a $250 million shortfall. It was the largest structural deficit in state history, and it was up to the incoming governor and legislature to fix it.
To opine, as Mr. Simonich did, that the state did not face this financial reality in late 2010, and that somehow the problem had been resolved earlier, is bizarre. Not only was the large deficit widely reported by virtually every media outlet in the state, including
The Associated Press and the Albuquerque Journal, it was described in an article in The Santa Fe New Mexican as a “daunting $452 million budget deficit.” Even Mr. Simonich reported at the time, while writing for the El Paso Times and several New Mexico newspapers, “[Gov. Martinez] knows the state is facing a budget deficit as the state Legislature prepares to go to work this month.”
There were various views on how to deal with this “budget deficit” (quoting Mr. Simonich). Gov. Martinez proposed to dramatically cut government spending, isolate education cuts to the bureaucracy and away from the classroom, change the state’s film incentive program to save money and enact employee pension adjustments to reduce the amount contributed by the state. The LFC proposed deeper education cuts, no changes to the film program and similar pension adjustments. Gov. Martinez felt the problem could be solved without a tax hike.
Ultimately, after a contentious 60-day session, several bipartisan compromises were reached to resolve the deficit in a responsible way.
Despite some lawmakers preferring to think otherwise, the budget that was adopted was a true mixture of approaches advocated by the governor and the Legislature.
Overall spending levels mirrored the executive’s budget, for example, and as proposed by the governor, adjustments to the film incentive program helped avoid deeper cuts in education and other parts of the budget. Meanwhile, the pension fixes and certain agency budgets more closely mirrored the preferred approach of legislators.
It’s true that New Mexico is not allowed to accumulate debt, which means deficits must be closed and budgets must be balanced.
That involves making difficult choices. In this case, neither side got everything they wanted, but the deficit was resolved, and the state has faced projected surpluses each year since.
Any attempt to rewrite this documented history is misguided, at best.
Tom Clifford is the Department of Finance and Administration secretary, former Legislative Finance Committee chief economist, and former Taxation and Revenue Department chief economist. This was also signed by Duffy Rodriguez, a former state budget director under Govs. Gary Johnson and Susana Martinez, and former Taxation and Revenue secretary under Gov. Bill Richardson, and Michael Marcelli, the state budget director and former state budget analyst under Govs. Bill Richardson and Susana Martinez.