The New Mexico Board of Finance will hold a special meeting in August to consider spending cuts due to lower-than-expected revenue in early fiscal 2011.
Revenues were $32 million lower than predicted in fiscal 2010, with another $160 million drop seen in fiscal 2011, which began July 1.
Spending on state programs and aid to public schools would be cut by 3% in the plan proposed by Gov. Bill Richardson. The administration said the drop in revenues is a result of state’s weak economy.
Katherine Miller, secretary of the Department of Finance and Administration, said the state could use $130 million from cash reserves to deal with some of the decline.
However, another $150 million must be cut from the $5.4 billion budget for fiscal 2011, she said.
Budget cuts will begin in September if the Finance Board approves the plan, Miller said, with only Medicaid and services for the developmentally disabled being immune.
The Legislature has cut state spending by almost $650 million over the last two fiscal years, and raised taxes by $180 million. New Mexico used $200 million in federal stimulus funds this year to avoid spending cuts for public schools and Medicaid.
The current budget is based on an assumption that Congress would continue higher-than-normal payments for Medicaid as part of the stimulus package in fiscal 2011.
Miller said the payments may not be as large as expected, which could result in a budget shortfall of between $47 million and $180 million.
