Along with NM Voices for Children’s analysis of the Special Budget session, we offer two charts that tell the sorry tale of US response to COVID and the perilous place we are in. Plus a News-in-Brief link to a report on the court decision to halt the pipeline.
Before we dive into NM Voices’ analysis of the 2021 Special Session, we offer a reminder about tonight’s Zoominar and a brief look at the US vs the rest of the world in COVID cases. It ain’t pretty. At the end of the post, another Playing for Change video: “Pride of Everyday People,” our tribute to the essential workers.
TONIGHT, July 7, 6:30-8 pm, Health Security Act in NM, A Dream That Could Become Reality in 2021.
Assuming even more wins in state legislative races in November, in January we will have an enormous opportunity to get a far more progressive and productive tax and revenue system; we will have a chance to get a public bank; and we will have a chance to become the first state in the nation to pass universal health care.
But we will need an army of engaged, educated and active folks like you to make it happen. Let’s find out what the Health Security Act is, why we need it, and how we can make sure it passes in 2021.
Our July 7 Zoominar will include Dr. Mary Feldblum, Executive Director of Health Security for New Mexicans Campaign, an organization she formed in 1992. Joining her on the panel will be Tyler Taylor, a Los Alamos physician and member of the Campaign’s Executive Committee, and Shelley Mann-Lev, a Board Member for the NM Public Health Association and chair of its policy committee. The panel will outline what the HSA is, how it would benefit New Mexicans, how it would be implemented, governed and operate. Finally, the panel will describe the botched recent report produced by HGN Health Consulting that was supposed to describe how the HSA would benefit New Mexico.
News in Brief: This could become a feature in the blog, no commentary, just links to 2-3 news items we feel might be of interest. We lead with the Dakota Pipeline shutdown, but also include links to an important Supreme Court decision and some very good news on the election.
- From Common Dreams: Monumental Victory: Tribes, Activists Celebrate Court Shut Down of Dakota Access Pipeline;
- From NPR : Electoral College Delegates Can’t Vote Their Personal Choice, Must Follow State Election Law.
- From Politico: Politico’s Election Forecast: Trump, Senate GOP are in Trouble
Do you like having these News in Briefs?
What COVID Looks Like in the US Right Now!
In much of the developed world, COVID is well under control; movie theaters are open and people are going to bars, restaurants and sporting events, safely. Those countries had leadership that took COVID seriously. They launched a national strategy that included required masks; stay at home orders strictly enforced; social distancing when going out was essential; and centralized procurement of PPEs and ventilators. They initiated strategic testing and contact tracing. They suffered for a month or two, but people understood what was at stake and you didn’t have people defying orders or questioning the need to follow public health directives. But here in the US, public health leadership has been undermined first by Trump’s refusal to provide leadership and because “American Individualism” has developed into a pathological condition where being told to where a mask or stay home is considered an affront to liberty.
As a result, we have done almost NOTHING RIGHT here. In the US, it is every state for itself in securing masks, test kits, PPEs and ventilators, driving up the price of all of it and, much to the glee of the corporations producing the goods. But even worse, it means that some states have more than they need while others are running out. Anyone who has watched any news has seen the maskless parties on the beach and in bars, with those folks following the lead of the President who routinely holds large, crowded events with no social distancing and few masks. Well, the two charts below show how well this is working in the US and how we compare to the rest of the world.
The second chart is even more alarming. Notice that beginning in April, our curve began to flatten despite our haphazard implementation of national guidelines, many states had shut down and resisted Trump’s taunts to reopen. Until the first week of June. Predictably the inevitable spike occurred and look below at late June through now. Notice also the cluster of lines at the bottom of the chart with the dozens of other countries that have truly flattened the curve. That could be us if we had had anyone else on earth as our President. As our readers know, we have been critical of Obama on many fronts. But just imagine how differently he would have handled this.
All Trump can talk and tweet about are the terrorist mobs that are, in reality peaceful protesters raising their voices against our national insanity on many levels. Trump offers almost no reference to COVID except specious claims that he has saved hundreds of thousands of lives. In reality:
What Happened to the State Budget
During the 2020 Special Session
After reading over NM Voices for Children’s work below, it seems clear that the Governor and Democratic leadership didn’t attempt to address the budget crisis by even considering closing loopholes and adjusting NM’s all too regressive tax system.
But it was unrealistic to expect the state, in a 4-day special session, to address tax changes that would have been resisted by the GOP and some Democrats, but if we do our summer homework we can further adjust the composition of both chambers and conduct this work in a far more progressive environment than during past sessions. And to be fair, as their analysis reveals, the Democrats did their best to limit the pain.
Retake, NM Voices, and other justice allies will be collaborating well in advance of the 2021 session to ensure that a series of tax change bills or an omnibus tax bill will be introduced to substantially change policies impacting revenue generation.
Voices broke down the cuts in detail but first we offer their introductory remarks:
“The New Mexico Legislature was called into a special session on June 18, 2020, in order to address revenue shortfalls in the state budget. The shortfalls were the result of the loss in tax revenue due to the economic downturn resulting from the COVID-19 pandemic and the global drop in oil prices. Earlier this year, the U.S. Congress passed relief packages – the Families First (Families First) Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act* – which helped address some of the state’s budget shortfalls and virus-related costs. However, even with federal funding, the state trimmed the budget they had passed in January 2020 by $580 million.
About $400 million of that amount is recurring and $180 million is nonrecurring. These cuts include essential services such as education and health care, which are critical for the health and well-being of New Mexico’s children and families. Though revenue-raising measures were not considered during this emergency session, state policymakers must raise new revenue in the next legislative session (beginning in January 2021) in a way that makes our tax system more fair and ensures that the state does not face more cuts to essential services that limit the ability of our families, communities, and state to survive the pandemic and rebuild our economy afterwards.”NM Voices for Children
State Budget Overview:
No one in NM understands better how a budget functions as a moral document than NM Voices. Their analysis of how fiscal and tax policy impact the lives of children, families and communities is as excellent as it is indispensable. Voices outlines how the Governor and NM State legislature wrestled with the budget crisis but in the seven fact sheets that follow, their analysis lays out how the federal COVID relief packages impacted NM’s healthcare, housing, education, unemployment, native communities, small business and food assistance. Great stuff.
With the exception of a few comments in italics lead by “–Retake” the remainder all comes from Voices.
- Revenue for the FY20 budget, which just ended on June 30 – was almost $400 million short of what had been appropriated. This hole was fixed by drawing from the state’s reserves. —Retake: Much better than more cuts.
- Revenue for the current budget year – FY21, which started on July 1, 2020 – was estimated to be $1.98 billion – or about 25% – short. This hole was fixed with a combination of drawing from the state’s reserves; appropriating federal relief dollars from the Families First and CARES Acts; pulling back some money budgeted for capital outlay (infrastructure); and cutting more than $570 million in funding (see below for details).
- When passed in February 2020, the FY21 budget was a 7.5% increase over the FY20 budget. The reduced FY21 budget is now about 1.5% higher than the FY20 budget. This means that the planned – and needed – increases for FY21 were scaled back to varying degrees, leaving some programs, like Medicaid, dangerously underfunded. –Retake: Underfunding Medicaid expansion is financially crazy as the Feds match state investments in Medicaid at $9-1.
- For FY21, the Legislature authorized across-the-board cuts of 4% for all state agencies, with the following exceptions:
- Public Education Department: 1% cut for K-12 schools and the state equalization guarantee (SEG) distribution (see below for details);
- Department of Health: 2% cut;
- Human Services Department: 3% cut for Medicaid; and
- Higher Education Department: 6% cut for non-instructional higher education.
Pay Increases: –Retake: Clearly the state at least made the cuts in salary increases regressive but still.
- Instead of getting the 4% pay raise that was planned, New Mexico teachers, most school employees, and all state employees earning less than $50,000 annually will get a 1% pay increase.
- School administrators and state employees earning more than $50,000 annually will get no pay raise.
Human Services Department:
- The total (state and federally funded) Medicaid budget grew by 9.6% because Congress temporarily increased funding for state Medicaid programs by increasing the federal match rate (FMAP) in the Families First Act; and
- The governor is also authorized to transfer up to $37.5 million from the tax stabilization reserve to the Human Services Department in the event that the federal government does not extend the FMAP increase for a longer period of time.
Public Education Department:
The 1% ($146 million) cut was accomplished with the following changes:
- $6 million was cut from elementary physical education programs;
- $40 million was cut from K-5 Plus programs;
- $4.2 million was cut from mentorship stipends;
- $2 million was cut from early literacy interventions;
- $92.6 million was cut from the planned school personnel salary raises;
- $32.4 million was cut from the base SEG appropriation; and
- $31 million was added to reflect a lower federal Impact Aid credit assumption.
Higher Education Department:
- Funding for the new Opportunity Scholarship was cut from $17 million to $10 million.
Early Childhood Education and Care Department (ECECD):
- A $5M cut to program support, public pre-k, and the department on top of the 4% sanding; and
- $20 million was taken from the newly created endowment fund.
Federal CARES Act:
The $1.25 billion received from the federal CARES Act was allocated as follows:
- $750 million was allocated to the general fund appropriation account for solvency (federal authorization for use of the $750 million has not been given but is expected);In signing the budget, the Governor stated the legislature did not have the authority to appropriate the remaining funds. The Governor will appropriate the remaining CARES money as follows:
$140 million was allocated to the state for COVID-19 expenses;
- $182 million was allocated to Albuquerque and Bernalillo County for COVID-19 expenses;
- $150 million was allocated to other cities and counties for COVID-19 expenses;
- $28 million was allocated to tribal governments for COVID-19 expenses.
Other Emergency Provisions/Powers:
- The rainy-day fund may be used to cover any additional revenue shortfall (and in the event that the $750 million in federal funds is not allowed to be used for general fund solvency); and
- The Department of Finance and Administration is authorized to further reduce all state agency budgets by an additional 2% if revenue shortfalls continue.
Other Bills Impacting Budgets and Revenues
Tax Changes (HB6):
- Provides for a temporary waiver of interest and penalties due on some tax liabilities like personal income taxes and gross receipts taxes (GRT);
- Doubles the distribution of internet GRT revenue to local governments (from $24 million to $48 million) for FY21 due to the increase in online purchasing and the decrease in brick-and-mortar purchasing; and
- Decouples from the federal corporate tax changes made in the CARES Act regarding business net operating losses, saving the state from losing between $20 million and $40 million in corporate income tax revenue.
Capital Projects (SB5):
- Claws back $141 million that had been appropriated for capital outlay and road projects.
HB1 Fiscal Impact Report, Legislative Finance Committee
2020 Post Special Session Financial Report Including Executive Action, July 1, 2020, Legislative Finance Committee
*For more on how the federal relief packages will impact New Mexico, please see our series of fact sheets, “How the Federal COVID-19 Response Impacts New Mexico.”
- Impact of Federal COVID Funds on NM Healthcare
- Impact of Federal COVID Funds: NM Housing Assistance
- Impact of Federal COVID Funds: Education
- Impact of Federal COVID Funds: NM Unemployment Insurance.
- Impact of Federal COVID Funds: Native Tribes, Cities & States
- Impact of Federal COVID Funds: Small Business
- Impact of Federal COVID Funds: Food Assistance
Pride of Everyday People
When this was recorded, we didn’t have “essential workers” in our vernacular, but if there was ever a song paying tribute to those workers, those everyday people, this is it. Plus it is Playing for Change, so that is always inspiring and uplifting.
Paul & Roxanne