Their View: Jennings says tough times ahead

State Sen. Tim Jennings, D-Roswell, is not pleased with Gov. Bill Richardson’s veto of the state gross receipts tax on food. Here’s a snippet from a recent editorial he sent to newspapers around the state:

“The already wobbly balance of income to expense in the state budget for the 2010-2011 budget year became more precarious with the governor’s veto of the renewal of the state gross receipts tax on food. The tax was expected to raise about $70 million and was part of a package of much-debated tax increases designed to soften the blow of cuts in state services.

“But next year’s budget isn’t this governor’s problem. By the next legislative session, he’ll be gone. However, it will be a problem for the career state employees who must ensure that schools stay open, the sick continue to receive care, roads remain passable, and the broad range of state government services continue. It is a problem that they should be planning for now as they work on their plans for spending the budget.

“Although the General Appropriation Act is enacted when the governor signs the bill, the real work of putting it into effect is in the operating budgets developed by each agency. As agency budget analysts go to work on those budgets in the next few weeks, they would be well-advised to keep the state’s risky financial position in mind.

“The sluggish economy continues to drag state revenues down, and the state’s tax collections suggest the trend will continue. Nationally, a 36,000 job loss in February wiped out the modest gains of 26,000 jobs in January. In the West, many places are experiencing unemployment rates around 10 percent and there is no sign the employment picture is going to improve.

“With consumers still struggling with high levels of debt, consumer spending is likely to continue. New home sales, hit by the large supply of existing homes at bargain prices, fell again in February, hitting their lowest levels since records began in 1963.

“Natural gas prices have fallen by 30 percent from their January levels. Futures contracts for April fell below $4 per thousand cubic feet, their lowest level since September. With demand dropping with rising temperatures, large purchasers have already started storing gas, earlier than usual, and that will mean softer prices later this year.

“The 2010-2011 budget year is already starting to look like it will be at least as great a challenge as the last two, when the state was only able to meet a constitutional requirement for a balanced budget by adopting solvency plans in the middle of the budget years. Not only will legislative and executive budget planners be facing a dragging economy, they will be coping with the evaporation of federal stimulus funds.

“Rather than follow the governor’s lead, state budget experts need to start planning now for what is likely to be another difficult year. Responsible budget directors will do what they can now to contain spending — no matter how much money appears available in the General Appropriation Act — to ensure that they will not have to make painful cuts in jobs or services when reality hits.”