N.M.’s finances are better than other states… for now

By now you know — or you should — that New Mexico has a big, fat budget hole.

Economists and other state officials estimate that weak tax revenue has left the state $440 million or so short of what it needs to cover expenses for the year that ends June 30. Gov. Bill Richardson and state lawmakers are negotiating over what to do about the shortfall, what to take off the table as an option and what to leave on. An October special session is scheduled to bridge the budget gap.

But in the spirit of optimism, or for you pessimists out there who think I’m foreshadowing the state’s future — call it prophecy, perhaps — here’s a reminder that some other states are in much worse shape than the Land of Enchantment.

The Wall Street Journal reports that today state government employees in several states are taking an unpaid day off – called a furlough — while other states are shutting down offices.

Here’s an excerpt:

California drivers can’t line up to renew their licenses Friday. Wisconsin natives can’t order copies of their birth certificates. Georgia consumers will have to postpone registering complaints with state watchdogs. And stranded motorists in Maryland may have to wait a little longer for highway-department help.

Across the country, cash-strapped state governments are shutting down business for a day at a time to save money. State offices are shuttered Friday in California, Maine, Maryland and Michigan. Rhode Island had planned to join them until a judge on Thursday blocked its closure plan.

The authors of the story go on to report that states across the country have turned to furloughs rather than layoffs for various reasons.

The furloughs, which basically act as salary cuts for state workers, are the latest response to plunges in tax revenue because of the recession. State legislatures have struggled to cover shortfalls that have ballooned to $168 billion, or 24% of their general-fund budgets, for the current fiscal year, which for most began July 1, according to a report released Thursday by the left-leaning Center on Budget Policy Priorities.

Consumers have reined in spending, eroding sales-tax receipts, while job losses have cut income-tax collections. States have already responded by raising fees and tapping rainy-day funds, and are now forced to deal with wage costs, which make up about 13% of their budgets, according to the Rockefeller Institute of Government in Albany, N.Y.

For political and practical reasons, states have been reluctant to lay off workers, policy analysts said. Instead, furloughs have become the hot trend in budget management, in part because the savings are “easy math” to state officials, said Scott Pattison, executive director of the National Association of State Budget Officers.

More than 20 states have considered furloughing employees, according to anecdotal reports as well as data compiled by the National Conference of State Legislatures, the WSJ reports.

Of course furloughing employees isn’t the only way to trim costs.

Already there’s talk from the New Mexico Human Services Department of cutting Medicaid, the joint federal-state health insurance program for the low-income, to help balance the budget and to prepare for a loss of federal stimulus funds at the end of calendar year 2010.

So take this post in whatever spirit you want — New Mexico is in better shape than other states, or we’re all headed toward a steep cliff. But until we see what budget measures Richardson and the Legislature agree to this fall we’re stuck in a netherworld between hoping that we’re doing better than other states and the realization that with a budget agreement we may not be.

Which reminds me of another maxim: Ignorance is bliss.