STATE OF NEW MEXICO Volume 1 - Legislative Finance Committee Report For Fiscal Year 2017 For Report Committee Finance 1 - Legislative Volume Report of the Legislative Finance Committee to the Fifty-Second Legislature SECOND SESSION January 2016 For Fiscal Year 2017 Volume i legislating for results: policy and performance analysis Senator John Arthur Smith State of New Mexico Representative Jimmie C. Hall Chairman Vice-Chairman LEGISLATIVE FINANCE Senator Sue Wilson Beffort COMMITTEE Representative Paul C. Bandy Senator Pete Campos Representative George Dodge Senator Carlos R. Cisneros Representative Jason C. Harper 325 Don Gaspar, Suite 101 • Santa Fe, NM 87501 Senator Carroll H. Leavell Representative Larry A. Larrañaga Phone (505) 986-4550 • Fax: (505) 986-4545 Senator Howie C. Morales Representative Patricia A. Lundstrom Senator George K. Munoz Representative Nick L. Salazar David Abbey Senator Steven P. Neville Representative Luciano “Lucky” Varela Director Honorable Members Fifty-Second Legislature, Second Session State Capitol Santa Fe, New Mexico 87501 Dear Fellow Legislators: Pursuant to Section 2-5-4 NMSA 1978, the fiscal year 2017 budget recommendation of the Legislative Finance Committee is provided to you. The committee recommendation for recurring appropriations from the general fund is $6.47 billion, $230.7 million more than the FY16 operating budget for a 3.7 percent increase in spending. However, $77.6 million of that amount, intended for compensation increases, is contingent on the state generating as much general fund revenue as projected, a caution reflecting the significant risk to the revenue forecast posed by depressed oil and natural gas prices. Proposed new spending is essentially flat with projected “new money” of $232 million, leaving general fund reserves at $427.4 million, or 6.6 percent of proposed appropriations. With the expected release of most of the $101.7 million set aside to address a contingent liability in the FY14 general fund audit, the reserves would reach a prudent 8 percent, a sensible approach in this economic climate. With the end of 2015 peppered with bad economic news, the committee was forced to make hard budget decisions and focused new spending on Medicaid, education, early childhood investments, public health, workforce development and economic growth, public safety, and the protection of New Mexico’s most vulnerable with an emphasis on programs with proven success. Recommended new recurring spending for early childhood programs is $21.4 million, a 9 percent increase over FY16. The increase includes additional funding for early literacy programs, prekindergarten, the K-3 Plus extended school year program, childcare assistance, and home visits to families with infants. General fund spending on higher education and public schools totals $3.7 billion in the committee’s recommendation, a 3.2 percent increase over FY16. The $2.8 billion spending plan for public schools, a 3.7 percent increase, includes funding to adjust the salary structure and targeted compensation increases contingent on general fund revenues meeting projections and higher starting salaries for new teachers. The committee’s recommendation for higher education includes healthcare education initiatives aimed at closing the gap in the supply of medical providers. General fund support for the departments of Public Safety and Corrections would increase 3.6 percent in the committee’s recommendation for a total of $420 million. For Corrections, the committee recommendation includes funds for hepatitis C treatment and medical and private prison cost inflation. The proposal for both agencies prioritizes safe staffing levels, higher pay, and strategic spending. I would like to thank the membership of the Legislative Finance Committee for their hard work on behalf of the people of New Mexico and the LFC staff for its thoughtfulness and diligence on this very difficult task. Together, we have prepared a responsible budget that prioritizes cost-effective spending that provides the most benefit to New Mexicans. Sincerely, Senator John Arthur Smith Chairman includes funds for hepatitis C treatment and medical and private prison cost inflation. The proposal for both Table of Contents agencies prioritizes safe staffing levels, higher pay, and strategic spending. I would like to thank the membership of the Legislative Finance Committee for their hard work on behalf of the Table of Contents people of New Mexico and the LFC staff for its thoughtfulness and diligence on this very difficult task. Overview Together, we have prepared a responsible budget that prioritizes cost-effective spending that provides the most benefit to New Mexicans. REPORT OF THE Recommendations and Highlights ................................................... 1 Table of Contents LEGISLATIVE Revenues and Tax Policy Sincerely, Overview FINANCE COMMITTEE Economic Forecast............................................................................. Recommendations and Highlights ....................................................1 REPORT OF THE TO THE Revenues/Tax Policy.......................................................................... LEGISLATIVE Senator John Arthur Smith Revenues and Tax Policy FIFTY-SECOND FINANCE LEGISLATURE Policy Analysis Chairman Economic Forecast............................................................................ COMMITTEE 77 SECOND SESSION Early Childhood .................................................................................. Revenues/Tax Policy....................................................................... TO THE 11 Education ........................................................................................... FIFTY-SECOND Economic Development and Workforce Training............................... Policy Analysis VOLUME I LEGISLATURE LEGISLATING Health Care ........................................................................................ Public Safety and Justice ................................................................... FIRST SESSION Early Childhood ...............................................................................1515 FOR RESULTS: Public Infrastructure ........................................................................... Education ........................................................................................2020 POLICY AND Natural Resources.............................................................................. Economic Development and Workforce Training ............................3434 VOLUME I PERFORMANCE Government Administration................................................................ Health Care .....................................................................................3388 LEGISLATING Public Safety and Justice ................................................................ ANALYSIS 4848 Investments Report…………….……………………………… FOR RESULTS: Public Infrastructure ........................................................................5353 POLICY AND Natural Resources ...........................................................................6767 JANUARY 2016 PERFORMANCE Government Administration .............................................................7171 FOR Performance…………………….……………………………… ANALYSIS FISCAL YEAR 2017 Investments Report…………….……………………………...77 Accountability in Government ........................................................... Report Card Criteria ........................................................................... JANUARY 2015 Performance Reports: Performance…………………….……………………………...81 Children, Youth and Families Department ........................................ FOR SENATOR Public Education ................................................................................ FISCAL YEAR 2016 Accountability in Government ..........................................................8383 JOHN ARTHUR SMITH Higher Education ............................................................................... Report Card Criteria ..........................................................................8484 CHAIRMAN Performance Reports: Economic Development Department................................................. REPRESENTATIVE Tourism Department.......................................................................... Children, Youth and Families Department .....................................8787 REPRESENTATIVE JIMMIE C. HALL Workforce Solutions........................................................................... Public Education .............................................................................90 LUCIANO “LUCKY” VARELA 90 VICE CHAIRMAN Human Services Department ............................................................ Higher Education ............................................................................9393 CHAIRMAN Behavioral Health Collaborative ........................................................ Economic Development Department ..............................................9797 DAVID ABBEY Department of Health......................................................................... SENATOR Tourism Department .......................................................................9999 DIRECTOR Aging and Long-Term Services Department ..................................... JOHN ARTHUR SMITH Workforce Solutions......................................................................100100 VICE-CHAIRMAN Human Services Department .......................................................102