SANTA FE, N.M. (AP) - New Mexico Gov. Susana Martinez signed off Tuesday on a plan to plug the state’s budget deficit and restore a modest financial cushion while vetoing limited cuts to economic development incentives that support businesses expansion.
The Republican governor agreed to budget changes that target $46 million in local school district reserves to beef up the state general fund. She also approved transfers from dozens of accounts approved by the Democrat-led Legislature.
However. she used line-item vetoes to block efforts to sweep money from a state infrastructure bank, a 911 emergency services fund and other accounts based on her public safety concerns and future costs to the state.
“While they sent over a package that isn’t perfect, I’m pleased that it doesn’t compromise our principles,” Martinez said of lawmakers. “It doesn’t make our families foot the bill.”
New Mexico has been grappling with a financial shortfall and plunging tax revenues linked to a downturn in the oil and natural gas sectors and a tepid local economy.
Spending across state agencies was slashed by 2.4 percent during a special legislative session in October, without fully addressing the deficit. The state’s credit rating was downgraded last year.
The governor also is allowing the state to tap tax payments by insurance companies immediately instead of waiting for the next fiscal year. That provision frees up at least $78 million, with some effects on the flow of money to volunteer fire departments and law enforcement.
School districts are expected to offset the 2 percent funding reduction with cash from reserves. An exemption was included for districts with reserves of 3 percent or less of annual expenses.
Martinez initially proposed direct cuts to school district reserves totaling $120 million by seizing especially large cash balances.
Leading Democratic lawmakers estimated the vetoes by Martinez would remove $26 million from the solvency plan, making it more difficult to satisfy credit-rating agencies and craft a budget for the fiscal year starting July 1.
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