SANTA FE – Local governments from Roswell to Santa Fe are being swept away in the “economic tsunami” of the coronavirus pandemic and may fall back on the state for financial aid, a leading state legislator warned Monday.
Sen. John Arthur Smith, chairman of the lead state budget-writing committee, said gross receipt taxes on sales and services that support municipal and county governments are drying up, as cities such as Santa Fe reel from the collapse of the state’s tourism sector.
At the same time, he says the U.S. government has limited the options for states to funnel federal recovery dollars toward local governments.
“Given its own financial crisis, New Mexico state government will be hard-pressed to find the resources to help,” Smith wrote in a committee newsletter. “But it must.”
He suggests the state can address its own likely budget hole by sweeping money from idle accounts, delaying construction projects, suspending pay raises and shifting the way it pays for some services.
The Legislature is gathering June 18 for a special session to rewrite the general fund budget and conserve spending during the fiscal year starting July 1. Smith lost the June 2 Democratic primary to run for re-election, but still will oversee state Senate budget negotiations during the special session.
In other budget matters, financial analysts are warning that the trust fund that underwrites New Mexico unemployment benefits could be depleted by October if spending continues at the current rate.
The fund’s balance fell from $458 million in mid-March to $322 in mid-May as the state’s unemployment rate surged past 11%, according to staff at the nonpartisan Legislative Finance Committee.
The unemployment insurance trust fund is sustained by contributions from employers. The federal government offers loans to depleted unemployment funds at zero interest to sustain benefit payments.
