Legislating for Results: Policy and Performance Analysis
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NEW MEXICO LEGISLATIVE FINANCE COMMITTEE LEGISLATING FOR RESULTS: POLICY AND PERFORMANCE ANALYSIS Volume 1 Report to the Fifty-Fifth Legislature, First Session VOLUME 1 Legislative Finance Committee Report For Fiscal Year 2022 January 2021 for the 2022 Fiscal Year lfc fy22 vol 1 cover.indd 2 12/3/2020 9:04:02 AM Senator Roberto “Bobby” Gonzales State of New Mexico Representative Patricia A. Lundstrom Chairman Vice Chairwoman LEGISLATIVE FINANCE Senator William F. Burt COMMITTEE Representative Phelps Anderson Senator Pete Campos Representative Gail Armstrong Senator George K. Munoz Representative Randal S. Crowder Senator Steven P. Neville Representative Rudolpho “Rudy” S. Martinez Senator Mary Kay Papen Representative Javier Martinez Senator Clemente “Memé” Sanchez Representative Candie G. Sweetser Senator James P. White Representative G. Andrés Romero David Abbey Director 325 Don Gaspar, Suite 101 • Santa Fe, NM 87501 Phone (505) 986-4550 • Fax: (505) 986-4545 Honorable Members Fifty-Fifth Legislature, First Session State Capitol Santa Fe, New Mexico 87501 Dear Fellow Legislators: Pursuant to Section 2-5-4 NMSA 1978, the fiscal year 2022 budget recommendation of the Legislative Finance Committee is provided to you. The committee recommendation for recurring appropriations from the general fund is a little more than requested at $7.36 billion, up $298.4 million, or 4 percent, from FY21 spending levels. While revenues in FY21 are expected to decline from the current year, and revenues for the current year are down from the prior year, the state is in a better position than initially anticipated, with good financial planning by the Legislature and federal stimulus support to businesses and the unemployed partially offsetting the effects of a pandemic-induced gutting of the economy and a crash in oil prices and production. The recommendation provides flat budgets for most state agencies but also supports modest growth for education and healthcare, expands early childhood services by relying on the new trust fund instead of the general fund, more effectively uses state dollars to leverage federal matching funds, and shifts savings from declining workload in the foster care program and prison system to evidence-based community interventions that use state money more effectively. It also restores the general fund appropriations for programs temporarily supported with the one-time use of federal money after the budget was adjusted in June to survive the fiscal crisis. Reflecting continuing concern with the many unknowns of the fiscal climate, the recommendation would leave FY21 reserves at 22 percent of planned spending, a level that is an effective hedge against a plunge in the oil industry, a downturn in the economy, or both. The committee’s recommendation for general fund appropriations for public education totals $3.32 billion, a 3.3 percent increase from FY20 levels. The recommendation also includes $185 million in nonrecurring, education- related appropriations, including $153 million from the public education reform fund to address issues highlighted in the education sufficiency lawsuit. The spending plan provides sufficient funding for all schools to participate in Extended Learning Time Programs and restores FY20 spending levels for the K-5 Plus extended school year program. With significant projected learning loss due to school closures and remote learning in FY20 and FY21, the state must provide additional instruction both to help students catch up. The recommendation for the Human Services Department includes an additional $110.1 million from the general fund, an increase of 10 percent. The recommendation replaces the general fund dollars swapped for $75 million in federal funds appropriated during the 2020 first special legislative session and provides additional general fund support for enrollment growth, maintenance of hospital and Medicaid provider rates, and to offset declines in other funds. In addition, the recommendation includes significant increases for the Medicaid Behavioral Health Program, Children’s Behavioral Health Services in the Children, Youth and Families Department, and the Health Department. I would like to thank the membership and staff of the Legislative Finance Committee for their hard work on behalf of the people of New Mexico during an extraordinarily difficult year. Despite constantly changing financial conditions and complicated logistics, the committee and its staff have crafted a thoughtful, responsible budget that prioritizes the needs of the most vulnerable New Mexicans. Sincerely, Senator Roberto “Bobby” Gonzales Chairman Table of Contents Overview report of the Recommendations and Highlights .......................................................... 1 Legislative Finance Revenues and Tax Policy Committee Economic and Revenue Forecast .......................................................... 9 Fiscal and Tax Policy ............................................................................ 14 to the Investments .......................................................................................... 21 Fifty-Fifth Policy Analysis Legislature, Child Well-Being ................................................................................... 23 First Session Education.............................................................................................. 34 Economic and Workforce Development ............................................... 46 Health and Communities ...................................................................... 52 Volume I Public Safety......................................................................................... 61 Legislating for Courts and Justice ................................................................................ 69 Public Infrastructure.............................................................................. 73 Results: Policy Natural Resources ................................................................................ 84 and Performance State Employment and Compensation ................................................. 91 Analysis Performance Accountability in Government ............................................................. 101 Public Education ................................................................................. 104 January 2021 Higher Education ................................................................................ 108 for Early Childhood Education and Care Department...............................113 Fiscal Year 2022 Children, Youth and Families Department ...........................................114 Economic Development Department ...................................................118 Tourism Department ........................................................................... 121 Workforce Solutions Department ........................................................ 123 Human Services Department ............................................................. 127 SENATOR Behavioral Health Collaborative ......................................................... 131 ROBERTO “BOBBY” GONZALES Department of Health ......................................................................... 133 CHAIRMAN Aging and Long-Term Services Department....................................... 137 Corrections Department ..................................................................... 139 REPRESENTATIVE Department of Public Safety ............................................................... 143 PATRICIA LUNDSTROM Courts and Justice .............................................................................. 146 VICE CHAIRWOMAN Department of Transportation ............................................................. 150 Department of Environment................................................................ 152 DAVID ABBEY DIRECTOR Energy, Minerals and Natural Resources Department ....................... 155 Office of the State Engineer ............................................................... 158 General Services Department ............................................................ 161 State Personnel Office ........................................................................ 164 Taxation and Revenue Department .................................................... 165 Information Technology Projects ........................................................ 168 Tables Table 1: General Fund Agency Recommendation Summary.............. 178 Table 2: U.S. and New Mexico Economic Indicators .......................... 182 Table 3: General Fund Consensus Revenue Estimate....................... 183 Table 4: General Fund Financial Summary ........................................ 184 Table 5: Special, Supplemental, and Deficiency Appropriations ........ 186 Table 6: Information Technology Requests and Recommendations ... 201 Table 7: Fund Transfers ...................................................................... 202 Recurring Public Education Early Childhood General Fund History Funding History (in billions) FY12-FY22 (in millions) $3.5 $500 $3.0 $450 $400 $2.5 $350 $300 $2.0 $250 $1.5 $200 $150 $1.0 $100 $0.5 $50 $- $0.0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22* FIT PED Operating Budget Early Literacy PED Special Appropriations FY22 FY22 LFC Rec. K-5 Plus Categorical Appropriations RecommendationsPrekindergarten and Highlights State Equalization Guarantee Home Visiting *LFC Recommendation Child Care Assistance n the heels of