As part of the first remote Board meeting in its history, the Greater Albuquerque Chamber examined the economic outlook for New Mexico through the expertise of state legislative leadership and a national energy expert. Chair of House Finance and Appropriations (HAFC) Rep. Patty Lundstrom (D — McKinley & San Juan) and Senior Vice President for the Global Energy Institute at the U.S. Chamber of Commerce Christopher Guith tackled the state fiscal situation and global energy market, respectively.
Chairwoman Lundstrom opened her remarks to the Board by discussing the legislature’s solvency plan to tackle the budget shortfalls wrought by the COVID-19 pandemic and the disruption of global oil and gas prices and production. HAFC will open its work for the special session on June 17 with the latest revenue projections, while the previous projections showed a FY2021 shortfall of $1.7-2.4 billion.
One of the key factors will be how much flexibility the state will be given in how it can utilize $750 million in federal aid, but the plan to close budget holes in current and future fiscal years will likely involve rolling back public employee pay increases from 4% to around 1% and converting road construction appropriations to debt financing. “I can’t support salary increases beyond 1% with so many people in the private sector losing jobs,” said Chairwoman Lundstrom.
Rep. Lundstrom also described a plan to roll back one-time appropriations in the current state budget, and set a target for state reserves at 12-13%. “We’re trying to roll back re-occuring expenses and pull back on one-time appropriations,” said Chairwoman Lundstrom. “We’ll also try to afford the Governor flexibility in setting priorities for funding as we move ahead.”
In response to Chamber President & CEO Terri Cole’s question regarding the legislature’s plan if Congress fails to provide flexibility on how the state uses federal aid funding, Chairwoman Lundstrom described a plan involving taking credit for federal aid — much as the state’s education funding formula does for Impact Aid — in departmental budgets relevant to COVID-19 response. The Chamber recently sent a letter to Congressional leadership advocating for this type of flexibility to be provided in any future federal COVID-19 relief legislation.
Chamber Board Member and General Manager of Doubletree by Hilton Albuquerque Karl Holme asked about the state’s plans to continue to finance Department of Tourism programs to drive visitors to the state, and Chairwoman Lundstrom noted the importance of the billion-dollar tourism industry to the state’s economy, and discussed the difficulties in holding large conventions under COVID-19 gathering restrictions.
Chamber Board Member and Bohannan Huston, Inc. President and CEO Bruce Stidworthy asked about clawbacks in capital outlay projects, and Chairwoman Lundstrom articulated a plan to review and target projects with little to no movement toward being executed since the appropriation was made.