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Deming Drills

Guv orders furloughs, job elimination as response to financial woes

Gov. Bill Richardson on Thursday pledged to axe 1,000 vacant state jobs, ordered nearly 20,000 state workers to take five furlough days and cut state agencies.

Those actions, along with the promise to eliminate at least 84 state jobs held by political appointees, represented the governor’s answer to New Mexico’s worsening financial situation.

“I won’t pretend that these actions will solve all our budget problems, but it’s a start,” Richardson said at a midday news conference at the state Capitol.

As painful as the decisions were, state lawmakers said Thursday that they would have been less painful had the governor not delayed them for months while hoping for an economic rebound powered by federal stimulus dollars.

“They were forewarned in July,” state Sen. John Arthur Smith, a Democrat from Deming, said in reference to the Richardson administration. “There was a group of us that envisioned where we were headed and it was going to be painful. The governor would have done well to start looking at the expenditure side in July rather than waiting until November.”

Richardson, who has repeatedly said his administration has saved millions of dollars through a hiring freeze this year, reiterated that point Thursday.

A hiring freeze he ordered earlier in the year has resulted in 2,900 vacancies across state government, Richardson said defiantly.

The governor and state lawmakers’ sharp words are coming as they attempt to plug most of a $650 million budgetary shortfall this year even as more ominous financial clouds darken the horizon: A projected $1 billion shortfall already predicted for next year’s budget.

Richardson acted Thursday on a budgetary fix the Legislature approved during an October special legislative session. But the governor used his line-item veto authority to sidestep much of the Legislature’s bill, striking out a major provision that had ordered him to make 7.6 percent cuts at agencies under his control.

To make up for the cost savings he vetoed in the Legislature’s bill, Richardson issued an executive order requiring state agencies to cut spending. The cuts varied in severity, department to department, depending on a mix of factors, including how they might affect public safety, education or health care.

“For whatever reason the Legislature made a hasty decision during the special session, particularly when it forced a blanket cut of 7.6 percent on top of previous cuts on most state agencies,” Richardson said. “They did not take into account the impact these cuts would have on critical services.”

In a series of news releases leading up the decision, the Richardson administration said the Legislature’s budget bill would force the state to slash Medicaid (the government’s low-income health insurance program), shutter two prisons, release hundreds of non-violent offenders and close state parks.

Richardson made sure to drill home to the media Thursday that his actions averted the closure of state parks and prisons. And Medicaid, estimated to lose $150 million under the Legislature’s budget fix according to the Richardson administration, would lose only $28 million.

Furloughs and elimination of jobs

Meanwhile, Richardson said, he chose the furloughs — in which state workers take days off without pay — and the elimination of vacant jobs instead of laying off state workers. The state is projected to save nearly $11 million with the furloughs, which will work out to the rough equivalent of a 2 percent salary cut for state workers. It is unclear when furloughs will begin, Katherine Miller, Richardson’s budget chief, said.

It also was unclear how much the state could save by doing away with 1,000 state jobs.

“I don’t want layoffs. I don’t want people to lose their jobs. We are not at that stage,” Richardson said.

Richardson’s explanation didn’t inoculate the governor against criticism from state employee unions.

“It is very unfortunate that they’re balancing the budget on the backs of 20,000 hard-working middle class people,” Carter Bundy of American Federation of State, County, Municipal Employees, Council 18, said Thursday. ASFSCME represents about 6,500 classified state workers in New Mexico.

A balanced approach

Bundy and some state lawmakers said on Thursday that the governor could have avoided furloughs had the Legislature been able to consider tax increases during the special legislative session. With a narrowly worded proclamation, Richardson effectively prohibited state lawmakers from considering any tax increases.

“It is unfortunate that the Legislature and governor could not take a more balanced approach to solving this fiscal crisis, by raising some revenues to minimize the amount of cuts to critical public services,” said Democratic Sen. Eric Griego of Albuquerque.

Richardson has since said the Legislature must raise taxes during the January legislative session. The state’s projected $1 billion shortfall for next year is too large to close through cuts alones.

In everyday terms, that $1 billion shortfall represents nearly $1 out of every $5 the state spends on services, meaning state lawmakers have a big challenge ahead. Many lawmakers acknowledge that closing that shortfall will require a mix of tax increases and spending cuts.

State lawmakers challenged Richardson not only on his overall approach to fixing this year’s budget, but on individual actions as well.

Anger over Medicaid cuts

One sore point with some lawmakers was Richardson’s decision to cut Medicaid. In recent weeks several lawmakers have said their budget protected Medicaid and never intended to cut the program despite the Richardson administration’s pronouncements to the contrary.

“They were already being underfunded as it is,” state Rep. Jose Campos, D-Santa Rosa, said of Medicaid. “Taking out another 1 percent is just going to be creating more harm than good.”

Richardson cut $5 million in state funding from the program, but because of the quirks of Medicaid funding, that resulted in an additional loss of $23 million in federal matching dollars. The state and federal governments jointly fund Medicaid, but the federal government is the senior partner, providing a 4 to 1 match for every New Mexico dollar that is spent on Medicaid (counting federal stimulus dollars).

Political appointees

Richardson said he was prepared to sacrifice like all New Mexicans, and pointed to his decision to eliminate 84 jobs usually held by his political appointees.

“A lot of individuals will lose their jobs,” Richardson said of his political appointees.

But Rep. Nate Cote, D-Las Cruces, didn’t buy that answer. He noted that more than 60 of those jobs are already vacant, a statement Richardson disputed Thursday afternoon.

“So really, he’s getting rid of very few,” said Cote, who was one of the first to propose cuts to the governor’s political appointees during the special session. “Personally, I don’t think it’s enough. … He probably has 20 people that are occupying those positions that are leaving anyway.”

“I don’t think he’s sacrificing much by doing this,” Cote said. “Meanwhile, I think he’s sacrificing some of the hard-working state employees with furloughs.”

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