Our view: Legislators finding budget solutions

March 10, 2017

New Mexico State University Chancellor and President Garrey Carruthers is hardly a wild spender. He is a former Republican governor of New Mexico and as NMSU’s leader has presided over painful budget cuts, brought on by the state’s wider economic woes.

So when Carruthers says, as he testified before the state Legislature, that New Mexico cannot continue its cutting education budgets, lawmakers should listen. The picture painted by Carruthers and other education leaders is a bleak one. Carruthers predicted that because of budget reductions, colleges and universities might have to hike tuition by as much as 30 percent. Staffing will be cut. Such layoffs would impact towns and cities where universities and colleges are big employers. Other education leaders, including school superintendents, talked about program cuts that might be necessary if the Legislature can’t find a way to protect school funding. Santa Fe Superintendent Veronica García has said more cuts could mean reduced salaries, furloughs and cuts in the athletics budget.

The Senate Finance Committee heard the different stories, but the person who needs to be paying attention is Gov. Susana Martinez. Unfortunately, her top representatives for education — the secretaries for the Higher Education and Public Education departments — did not testify as expected when the budget was discussed. That’s most unfortunate.

What makes Carruthers’ words so valuable are actions he already is taking at NMSU. Rather than simply slashing budgets as state dollars decrease, NMSU is reorganizing the university. There also have been some three dozen layoffs and the further reduction of several hundred positions through retirement or attrition. Over the past two years, NMSU has slashed some $30.5 million from the instruction and general budget — currently just over $178 million. That includes the 5 percent emergency reduction required by the Legislature after the fall’s special session. All this, on top of reduced student enrollment and likely fewer federal dollars and further state budget cuts. These are not easy times for school budgets — no matter the grade level.

What NMSU is teaching the rest of the state is that, rather than react to cuts, it is time for school districts and university systems to seize the moment. Don’t cut across the board, as if all spending were equal. Use the hard decisions to change how business is done, always asking why we do what we do this way. As for 30 percent tuition increases, that would just cause enrollment to plummet and make college unaffordable for many New Mexicans (not to mention deplete the lottery scholarship dollars).

To prevent disaster, the bleeding must stop. That is why the state must find new sources of revenues — which happened in the budget passed by the House of Representatives and now being considered by the state Senate. Through collecting online taxes, raising fees for heavy trucks and other measures, the House budget has built in some $250 million in new revenues needed to keep the state functioning.

The Senate, too, is considering new sources of money, including a $1.50-a-pack increase in the cigarette tax ($89 million to go to public schools) and a 10-cent-a-gallon increase in gasoline taxes and other fees ($183 million a year). For the next few years, the gas tax would help shore up the state general fund reserves, which need to be restored to 5 percent of the the $6.1 billion state operating budget, or $300 million. Unless the reserves are restored, the state faces downgraded credit, which makes borrowing more expensive. Both “new” taxes likely will be vetoed by the governor, but the work in the Legislature at least will offer her choices when the budget finally arrives on her desk.

A ray of hope comes, too, from the bipartisan work on the tax code. In the House, Republican Rep. Jason Harper of Rio Rancho put together legislation eliminating hundreds of tax breaks for businesses and service providers. This would have the eventual effect of lowering gross receipts taxes. The bill would reduce the statewide gross receipts tax rate to about 3.1 percent, down from over 5 percent (this doesn’t include whatever additional taxes cities and counties add on).

The measure was passed late Thursday after much negotiating back and forth. We’re encouraged — although still skeptical — we want to see what the bill will cost before the Senate votes. However, the session doesn’t end until March 18, so there should be time to understand the ins and outs of Harper’s legislation so that senators can take an informed vote. What we do support is the cooperation among representatives to make changes and move tax reform along.

A week to go, and much work remains. But both senators and representatives have found new dollars, and they are building back reserves while still keeping spending under control. The alternative — truly damaging cuts to universities, schools and other essentials — is one New Mexico must avoid.