Yesterday, I wrote that despite the fact the we are facing a half billion dollar deficit, the first thing the legislature did was to increase spending for the session by nearly 6%. As an aside, you’ve got to wonder how they can say with a straight face that they canceled webcasting for fiscal reasons.
Well, it looks like the budget shortfall is not the only hit New Mexico is taking. In fact, when you factor in the other losses, you realize that New Mexico is not short half a billion. We’re actually out billions upon billions of dollars (subscription):
New Mexico’s permanent and pension funds reported combined losses of $11.6 billion in 2008 as nearly one-third of their value was swept away by a dramatic market downturn.
The state’s two big pension funds — managed by their own boards for retired state workers and schoolteachers — suffered major setbacks that could lead to legislative changes in benefits with an eye toward long-term solvency.
The Public Employees Retirement Association, or PERA, posted a one-year loss of nearly 32 percent, slipping from $13.3 billion to $8.9 billion. The Educational Retirement Board, or ERB, dropped from $9.4 billion at the beginning of the year to $6.6 billion at year’s end.
“There aren’t even good adjectives to describe what’s gone on nationally,” said New Mexico Investment Officer Gary Bland.
The state’s two largest permanent funds — public money from income sources such as oil and gas royalties that is set aside for investment — started the year at $15.3 billion. As of Dec. 31, 2008, the funds totaled $11.1 billion.
The Land Grant Permanent Fund and Severance Tax Permanent Fund generate money for public schools, state hospitals and jails and other basic government operations. They make yearly distributions based on an average of the previous five years. For that reason, the 2008 downturn could be felt for years.
Now, a quick look at the earmarks for New Mexico in the “economic stimulus package” makes it clear that nowhere near $12 billion is about flow back into the state:
Below are the figures given by the three representatives from numbers provided by the Ways and Means, Appropriations, and Energy and Commerce Committees:
Highways & Bridges $281,158,912
Transit Capital Grants $24,066,600
Clean Water State Revolving Fund $28,496,754
K-12 Education FY 2009 FY 2010 Total
Title 1 $53,207,000 $53,207,000 $106,414,000
Individuals with Disabilities Act $46,615,000 $53,669,000 $100,284,000
Educational Technology State Grants $3,873,149 $3,873,149 $7,746,297
Education Modernization, Renovation, and Repair $114,687,000
Higher Ed Total
Education Modernization, Renovation, and Repair $39,619,000
Aid Available Recipients Average Award
Pell Grant Max Award of $5,350: Award Year 2009 ‐ 2010 $188,365,171 $52,096 $3,616
Early Childhood FY 2009 FY 2010 Total
Head Start $2,949,834 $2,949,834 $5,899,668
Child Care & Development Block Grant $8,908,267 $8,908,267 $17,816,534
Community Services FY 2009 FY 2010 Total
Community Services Block Grant $2,847,778 $2,847,778 $5,695,556
Seniors FY 2009 FY 2010 Total
Low‐Income Home Energy Assistance $5,058,116 $5,058,116
Elderly Nutrition Services $806,764 $806,764 $1,613,528
Healthcare FY 2009 FY 2010 Total
Preventive Health and Health Services Block Grant $2,279,422 $2,279,422 $4,558,843
Federal Funding for State Medicaid Costs $528,486
State Fiscal Stabilization FY 2009 FY 2010 Total
State Fiscal Stabilization Fund $209,642,000 $209,642,000 $419,284,000
Employment and Training $15,888,368
Make Work Pay Tax Credit Eligible Workers
Relief for Jobless Workers Total Eligible Recipients
$25/Week Increase in Unemployment Benefits 70,351
Emergency Unemployment Compensation Program 13,756
Justice Assistance Grant (JAG) Funding $46,361,350
That would be just one reason that bailout upon bailout isn’t going to work. There just isn’t enough money out there to make up the losses. More importantly, 2009 is shaping up to look worse than 2008.