Governor Susana Martinez Signs State Budget, Capital Outlay, and PERA Solvency Legislation

Press Release

Governor Susana Martinez today signed a $5.89 billion budget proposal that increases state spending by 4.2 percent, or roughly $235 million. The balanced budget keeps New Mexico's financial house in order, while increasing funding for public education by nearly $112.1 million and providing a $29.5 million increase in Medicaid to deliver health care to those most in need. As the Governor has committed, this budget ensures that state government does not grow beyond a rate that is roughly equal to population growth and inflation.

"As I said when the Senate passed it, this budget is not perfect, in that it shortchanges the New Mexico Reads to Lead program, support for our most effective teachers, and several economic development tools," said Governor Martinez. "But the fundamentals of this budget are strong. It restrains state spending to a responsible level and ensures that we have strong reserves during uncertain economic times. And with the enactment of our bipartisan jobs package, New Mexico is poised to better compete for jobs and economic development."

Direct education reform funding includes $11.5 million for the State‟s early reading initiative, $4.0 million for direct assistance to schools that receive a grade of D or F under the state‟s A-F grading system, and $1.5 million for a new program to recruit more science and math teachers in underserved areas of New Mexico. Pre-K and K-3 Plus funding will also each increase by $4.9 million.

Under this budget, FY14 reserves are projected to remain above 11 percent of the state budget. Governor Martinez issued line-item vetoes totaling $1.7 million in recurring appropriations and $20.9 million in non-recurring funds when signing this budget.

Capital Outlay
Governor Martinez also authorized $218.1 million in severance tax bonds for capital outlay projects throughout New Mexico. This year, more than 60% of the capital projects signed into law have a regional or statewide impact and have been vetted and prioritized by local communities, state and local agencies, and elected leaders.

"I‟m particularly pleased with how many local governments made a refreshing and deliberate effort to communicate with my administration about their priority projects -- providing far more information than in the past about their projects and other sources of funding they were looking to acquire to ensure they are completed," said Governor Martinez. "As I‟ve said many times, when capital outlay funds are used correctly, they can result in substantial construction projects that support small businesses and new hiring, and they can provide for an investment in infrastructure projects that stretch across local jurisdictions, which often times have price tags that local governments would not be able to afford on their own."

The governor also noted that there were much fewer unfinished projects that required re-authorization of previous years‟ capital dollars.

"I am still disappointed, however, that so many legislators continued to use a grab bag approach to capital outlay," the governor added. "Despite much talk about „shovel ready‟ projects during the legislative session, legislators still included local projects in the bill that are anything but „shovel ready.‟"

Governor Martinez emphasized that there were still projects that were funded at far less than 10% of their total cost, meaning the funds could not be used in any useful way. There were still projects that aimed to use 10-year bonds for items that will not serve a public use for that amount of time. There were still projects that community officials, when asked, said that they did not need or desire. And, there were plenty of projects for which other sources of funding would have been much more appropriate.

The governor vetoed $4.4 million worth of funding in the bill.

"It should be the goal of every legislator to work together to make critical improvements to the infrastructure of our state -- which often serves as the foundation and pathway for commerce and economic growth," said Governor Martinez. "When we invest wisely, better prioritize, and put a premium on construction projects that improve our infrastructure, we can put New Mexicans to work and maximize the impact of these bond dollars."

PERA Solvency
The governor also signed SB 27, a pension reform proposal that aims to improve the long-term solvency outlook of the state‟s public employee retirement plan, which includes 31,000 public employee retirees and beneficiaries and 55,400 active members. SB 27 helps resolve a $6.2 billion shortfall over a 30-year period by increasing employee contributions to the plan and reducing benefit payouts. The reform does the following:

- A permanent reduction in cost-of-living adjustment (COLA) from 3 percent to 2 percent for most current and future retirees
- Increased COLA eligibility period from 2 years to 7 years after the retirement date, subject to a phase-in period
- Annual pension factor reduced by 0.50% for members hired after July 1, 2013
- Member contribution in the state general plan is maintained at 8.92 percent (foregoing a previously scheduled 1.5% decrease), while other plans also maintain their current percentage contribution
- Employer contribution is increased by 0.40%

"I don‟t think anybody got what they wanted out of this PERA reform package, but I agree with the Board that their job is to protect the retirement fund and ensure the fund is solvent and healthy and able to pay benefits for generations to come," said Governor Martinez. "I think this package moves us much closer to that goal, and, as with the educational retirement plan, I will continue to work with legislators from both parties to make any necessary adjustments to ensure PERA‟s future solvency."

Governor Martinez also acted on the following legislation:

SIGNED HB 58 -- Rural Telecomm Carrier Regulation
SIGNED HB 73 -- Convention Center Financing Act to All Cities
SIGNED HB 107 -- Municipal Court Fees for Law Enforcement
SIGNED HB 112 -- Data in School Accountability Reports
SIGNED HB 175 -- Suspension of Utilities for Deployed Military
SIGNED HB 178 -- Electronic Criminal Citations & Fees
SIGNED HB 219 -- Adequate Election Day Polling Place Staff
SIGNED HB 300 -- School Excused Absences for Pregnancy
SIGNED HB 304 -- Human Trafficking Civil Remedies and Services
SIGNED HB 334 --County Classes & Officer Salaries
SIGNED HB 353 -- Capital Outlay Project Reauthorizations
SIGNED HB 462 -- School District Solvency Flexibility
SIGNED HB 483 -- Public Defender Commission
SIGNED HB 581 -- Local Economic Development Project Entities
SIGNED HB 608 -- Bernalillo Criminal Justice & Review
SIGNED HB 628 -- Special Education Funding
SIGNED HB 654 -- Group Insurance Premiums & Fund Transfers
VETOED HB 133 -- Disclosure of Contributions by Contractors
VETOED HB 146 -- Sale of Methamphetamine Precursors
VETOED HB 392 -- Public Education Commission as Independent
VETOED HB 438 -- No Mandatory Parole for Certain Sentences
VETOED HB 569 -- Game & Fish License Time Period
VETOED HB 588 -- Community Engagement Teams
SIGNED SB 35 -- No Conviction for Certain Motor Offenses
SIGNED SB 36 -- Penalties for Certain Motor Offenses
SIGNED SB 99 -- Dental Amalgam Waste Act
SIGNED SB 113-- Tobacco Fund for CYFD Programs
SIGNED SB 138 -- Repeal Fruit & Vegetable Statutes
SIGNED SB 149 -- DNA Administrative Center
SIGNED SB 154 -- Hours of Sunday Alcohol Sales
SIGNED SB 202 -- Farm-Related Industries Driver‟s License
SIGNED SB 234 -- New Mexico Chile Advertising Act Violations
SIGNED SS 248 -- Driver Education Instructor Requirements
SIGNED SB 259 -- Increase Alcohol Server Training Frequency
SIGNED SB 392 -- Lottery Tuition Fund Distributions
SIGNED SB 307 -- Public Records Changes
SIGNED SB 341 -- Building & Remodel Contract Threshold Amount
SIGNED SB 352 -- Airline Employee Shifts and Hours
SIGNED SB 371 -- No Social Media Access for Employers
SIGNED SB 396 -- American-Made Vehicles in Procurement Code
SIGNED SB 397 -- Local Liquor Tax Proceed Uses & RAtes
SIGNED SB 422 -- No College Requests for Student Social Media
SIGNED SB 464 -- School District Solvency Flexibility
SIGNED SB 480 -- Subdivision Water Permits
SIGNED SB 510 -- Agricultural Property Valuation Times
SIGNED SB 621 -- Public Utility Efficiency & Cost Recovery
SIGNED SB 630 -- Clarify Lender Reporting Requirements
VETOED SB 4 -- Dialysis Facility Gross Receipts
VETOED SB 7 -- Tax Expenditure & Revenue Budget Reporting
VETOED SB 12 -- NMFA Changes
VETOED SB 16 -- Public Campaign Financing Changes
VETOED SB 25 -- Judicial Retirement Changes
VETOED SB 65 -- Pre-Release Medicaid for Incarcerated Persons
VETOED SB 114 -- Legislative Retirement Qualification
VETOED SB 128 -- Prospective Employee Credit Privacy
VETOED SB 131 -- Traffic Ticket Payment & Reporting
VETOED SB 158 -- Uniform Consequences Conviction Act
VETOED SB 171 -- Disabilities Concerns Committee
VETOED SB 217 -- Authority for Public Securities Terms
VETOED SB 269 -- Durable Medical Equipment Gross Receipts
VETOED SB 294 -- Criminal Record Expungment Act
VETOED SB 415 -- No Mandatory Parole for Certain Sentences
VETOED SB 458 -- Developmental Disabilities Service Changes

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