LFC Recommends Cuts

The Legislative Finance Committee budget recommendation for the 2009-2010 fiscal year calls for spending $5.88 billion from the state’s general fund and emphasizes education, health care while addressing the severe economic downturn.

The spending plan for the budget year that starts July 1, 2009, is a 2.4 percent decrease from current year appropriations. Even with program cuts, general fund spending would exceed the expected general fund revenue of $5.76 billion, necessitating a recommended $94 million transfer from reserves among other steps to increase the amount of available revenue.

“For the last few years, soaring tax revenues from the energy industry have masked weakening revenues from broad-based sales and income taxes,” said Sen. John Arthur Smith, LFC chairman. “Those weaknesses were dramatically unmasked over the last six months.”

General fund revenue estimates for FY10 have dropped 8 percent over the last year. Forecasts being prepared for the halfway point of the session may cut the figure for anticipated revenue further. State revenues are not expected to return to FY08 levels until FY12.

The committee’s recommendation for public school support is a 1.5 percent cut from the current year appropriation that reflects an expected drop in enrollment-driven funding units. Funding for pre-kindergarten, early elementary education, elementary physical education and other vital programs is substantially intact. With funding for the states’ colleges, education would continue to represent 58 percent of the state’s general fund spending.

As with public schools, the committee recommendation for higher education, while a 2.3 percent reduction from the FY09 appropriation, would preserve the programs that most directly serve students.

While the proposal for the Human Services Department is essentially flat compared with this year, savings in administrative and overhead costs and greater leveraging of federal matching funds should ensure the continued expansion of Medicaid healthcare coverage and the maintenance of the cash assistance program for poor families. The general fund recommendation for Medicaid represents a 5.6 percent cut, but the total recommendation, with the nearly 3-to-1 match in federal funds, is flat compared with the current year.

The recommendation for the Health Department is a 1.3 percent cut in general fund support and a 3.8 percent cut in total spending. The recommendation emphasizes spending on facilities management, an agency priority, and services to the developmentally disabled, a legislative priority.

“It took an intensive review of spending and revenue to make this budget work in the face of the state’s dramatic fiscal downturn,” said Rep. Jeannette Wallace, R-Los Alamos. “Many people will be unhappy but, when money is tight, we have to focus our resources.”

The 2009 legislative session starts January 20.