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The Wall Street Tumble this Morning, the Price of Oil, and the NM State Budget:  Special Session? 

As I watched the price of oil go down last week, and the stock market debacle this morning (were the hedge funds betting against the US economy again, triggering "sell" algorithms in the financial world as they did during the last collapse, and accelerating the plunge?) I called Sen. John Arthur Smith, Chair of the Senate Finance Committee this morning with a quick question:  Special session, Senator?  Bottom line:  one of the steadiest and most powerful hands in state government is cautiously optimistic, assuming action is taken now, that a special session will not be needed. (correction:  I left out the not here in my first version)

We will have to trim non-recurring expenses, he believes, but might well be able to do this by cutting on the order of $225 million (including $50 million in the so-called "Junior" fund) from 2020 legislative appropriations for roads.  This will eliminate the need to cut social services--especially in education and health care--from recurring increases in the 2021 FY budget, which begins on July 1 of this year.

The Governor can do this with a veto or two, but we may have a round of consultation among Senate and House leadership members (this would include  Sen. Mary Kay Papen, Sen. Peter Wirth, Sen. John A. Smith, Speaker Brian Egolf, and Rep.Sheryl Williams Stapleton, Rep. Patty Lundstrom), and Governor Lujan-Grisham, before this becomes a done deal. 

In the wee hours of the morning the session closed on Feb. 20, after some negotiation, the House accepted the Senate version of the budget, and the Governor signed off on it, reserving, of course, options available with her line-item veto power.  The Senate version was less expensive.  At this hour, it appears to have been a thankfully prudent move, even though it clipped the wings on some of legislative desires of the progressive wing of the Democratic Party.  The 7.6% increase in spending, after all, already was more than 3 times the consumer price index of around 2.2%, and the state's revenue forecasts, highly dependent on the price and production of oil in the Permian Basin, were already pushing the limits of prudence.

This is an election year, and a particularly volatile one so far.  No one wants a special session in the midst of all the noise.  The feeling among most citizens I talk to, is that we need to circle the wagons around prudent, cautious, courses of action, be they on the coronavirus front, the national economy, or the state budget.  

Political leaders are likely to listen to these voices.  Stay tuned.