Governor signs budget solvency plan, vetos some cuts

SANTA FE, N.M. (AP) - New Mexico Gov. Michelle Lujan Grisham signed Tuesday a budget solvency plan seeking to mend a multibillion-dollar deficit by scaling back spending increases.

But the Democrat vetoed Tuesday some cuts to public education and other areas.

State government finances are reeling from the economic fallout of the coronavirus epidemic and aggressive state emergency health restrictions designed to hold the virus at bay. State economists are forecasting a $2.4 billion decline in state government income through June 2021 amid the economic upheaval.

This month, Senate Democrats joined with a handful of Republicans during a special session to approve a roughly $7 billion spending plan for the budget year beginning July 1, which scaled back state spending by about $600 million.

Salary increases for state agency and public school workers were scaled back from 4% to 1% or less under the proposal, with pay bumps focused on lower-income public employees to offset rising health insurance premiums. The state government is under a hiring freeze, except a 200-job hiring spree to help identify and trace new coronavirus outbreaks

But the pullback on spending increases went farther than recommendations from Lujan Grisham.

The governor vetoed more than $30 million in budget cuts, restoring funding that had been slated for reduction for public schools and other measures.

Overall, recurring general fund appropriations were reduced by roughly $415 million for fiscal year 2021. Meanwhile, non-recurring general fund appropriations were reduced by approximately $102 million in fiscal year 2020 and $184 million in fiscal year 2021.

“My administration has from day one emphasized the importance of expanding the state’s reserves. I am glad to have done that work on the front end because it has given us needed flexibility as we move forward,” Lujan Grisham said in a statement. “In our fiscal approach, the ultimate goal will always be a responsible and responsive budget and a state government that meets New Mexicans directly where their needs are.”