New Mexico understands boom and bust.
We thought oil and gas production would give New Mexico a boom year. Good thing our legislators were cautious. Instead of spending all that new money – which now may or may not materialize — New Mexico lawmakers showed self-restraint by squirreling some of it away. Ironically, the financial uncertainties we face today waited until the session was over to manifest.
Prudently, lawmakers put some of the promised bonanza into income- generating accounts so that the proceeds can be spent over time. Legislation this year has created a few new funds and shored up existing ones.
The most ambitious effort is aimed at raising the education levels and general well-being of our smallest citizens. The Early Childhood Trust Fund has been created and endowed with $320 million, most of which will be invested and distributed through annual appropriations.
The Kiki Saavedra Senior Dignity Fund, named after the late legislator, sets up a $25 million fund that can be used for seniors in need. The money will have to be appropriated each year. It will address high priority services for senior citizens and adults with disabilities in New Mexico, to include transportation, food insecurity, physical and behavioral health, case management and caregiving.
The Rural Libraries Endowment Fund was increased by $2 million. This fund was created in 2019 year with just $1 million. It was the vision of Democratic Senator Jerry Ortiz y Pino, who said that in small rural communities the public library is often vital to civic and community life, but these libraries have no public funding and have to be supported by donations. The original 2019 request was for an ambitious $50 million, which would have generated enough income to provide meaningful support.
The laws creating these trust funds contain formulas setting out how much money must go into the fund and how much may be appropriated and spent at any time, frequently referring to such arcane concepts as five-year moving averages. Charles Wollmann, public information officer of the State Investment Council, explained that such provisions are intended to smooth out the distribution from the funds, so that we don’t get a big chunk of spending money in a good year and a dribble in a bad year.
Any major project takes time to get cranked up and functional, to the point where it’s ready to make use of the money. The state’s new Early Childhood Education & Care Department may be one such example, where the agency may not yet have the staff or facilities to implement the programs. That’s a reason for not rushing to appropriate excessive amounts of money.
In the midst of all these efforts to save money, one proposed amendment to the state constitution was an apparent contradiction. That was the effort, tried many times before, to take a little more money every year out of New Mexico’s great financial treasure, the Land Grant Permanent Fund. It didn’t pass. House Joint Resolution 1 would have increased the distribution by 1%. It was amended to one-half percent, but it stalled in the Senate Finance Committee.
Distributions from this fund are expected to contribute roughly $784.2 million in the current fiscal year, according to the State Investment Council.
Any trust fund created by the legislature can be amended by a future legislature. If circumstances change, the Early Childhood Trust Fund can be adapted. But any fund created by the state Constitution can only be changed by amending the Constitution. To change it again we’d have to amend the Constitution again. In the unique case of the Land Grant fund, the change also has to be approved by Congress. That’s a major difference between this fund and all the other funds, and a reason to be very cautious in changing it.
Contact Merilee Dannemann through www.triplespacedagain.com.