Richardson, Martinez wrangle over state budget

Governor-elect Susana Martinez and the outgoing administration Gov. Bill Richardson swapped accusatory statements Thursday over how bad New Mexico’s budget woes are.

Before it was all over Martinez was accusing the Richardson administration of playing “financial shell games” to hide the true size of New Mexico’s budget woes while the Richardson administration was questioning Martinez’s understanding of how state budgeting works.

The fireworks erupted Thursday afternoon after a top Richardson administration financial official gave the Associated Press a briefing of New Mexico’s budget that projected a $450 million budget shortfall for the year that starts July 1. That projection was based on certain assumptions and was, at the risk of oversimplification, a sort of worst-case scenario.

The $450 million figure is significantly higher than the $260 million figure the Legislature was briefed on earlier this fall. The lower estimate was based on a different set of assumptions than the scenario outlined to the Associated Press on Thursday.

But once the $450 million number was out, Martinez issued a blistering statement accusing the Richardson administration of playing hide-the-bad-financial-news.

“The revelation of a near half-billion dollar deficit is far worse than expected and confirms our suspicions that the Richardson/Denish administration has been hiding the ball all along with respect to the true budget deficit,” Martinez said in a statement issued Thursday afternoon. “This clearly has very serious implications for all New Mexicans.  I will work with the legislature to make the tough decisions necessary to balance the budget by getting spending under control.”

Martinez’s accusatory tone, in turn, provoked a sharp reaction from the Richardson administration, which released its own statement a little more than an hour following Martinez’s.

“It’s not surprising that Susana Martinez doesn’t understand the state budget and the growth of Medicaid since she ignored it during the campaign and has not yet accepted our offer for a thorough briefing,” Richardson’s deputy chief of staff, Gilbert Gallegos, said in a statement.  ”She can’t keep her unrealistic promises and still balance the budget.”

While running for governor, Martinez promised that she would not raise taxes in her first year at the same time she promised not to cut two of the largest areas in the state budget — public education and Medicaid, the government’s low-income health insurance program. Education and Medicaid make up 60 percent of the state budget.

Martinez’s campaign promises have given some state lawmakers pause, with some saying that to exempt that much of state government from cuts while raising  no new revenue is a recipe for pain.

Martinez, for her part, is sticking to her guns. She told reporters Wednesday that layoffs of state employees remain on the table as an option to balance next year’s budget, even though they aren’t her first option.

“The long-term solution to our budget crisis is to get our economy moving again and that is why I will oppose efforts to raise taxes,” Martinez said in her statement Thursday.

Either way, whether the state’s budget gap is $260 million or $450 million, or some number in between, there is no doubt that New Mexico faces a fiscal challenge when state lawmakers converge in Santa Fe in about two months.

Much of the growth in next year’s shortfall will be owed to the dwindling of federal stimulus money, which New Mexico used to pay for programs, such as public schools and Medicaid. The amount available to the state for next year will be much smaller, meaning the state must figure out how to replace the money or cut services and programs.

The new budget year starts in July 2011 and runs through June 2012.