California Journal of Politics and Policy

In spring 2017, the New Mexico State Legislature faced difficult financial and political challenges.Persistent high unemployment, high poverty, and outward migration combined with weakoil revenues and reduced federal spending has resulted in a steady reduction in General Fundrevenues. Shrinking revenues caused state legislators to twice revisit current appropriation levelswith the goal of avoiding budget deficits and providing assurances to investor rating agencies.Political discord regarding the appropriate fiscal remedy has made the financial situation moredifficult as legislators and the governor debate the need to increase revenues or cut state agencybudgets. At the conclusion of regular and special sessions, the legislature enacted a $6.1 billionbudget for the fiscal year beginning on July 1, 2017. The enacted budget reflects a small increasein public school funding (half of one percent) and a decrease in spending for higher education(one percent). Legislators ultimately provided the governor with multiple potential revenue increases.The governor vetoed all such increases opting to approve the use of severance tax bondproceeds from suspended infrastructure projects to balance the operational budget. The proceedsprovided just enough to balance the budget leaving only $24 million in reserve.