SANTA FE – New Mexico’s governor and leading state legislators on Thursday proposed a $1 billion increase in general fund spending for the coming fiscal year – an about 14% boost aimed at shoring up access to health care, improving public education and providing new investments in child well-being and public safety.
The lead budget-writing committee for the Democrat-led Legislature outlined its spending priorities ahead of a 30-day legislative session starting Jan. 18 that focuses primarily on spending and taxation.
“New Mexico has an opportunity for generational change with the amount of money that we have,” said Democratic Sen. George Muñoz of Gallup.
The Legislature’s spending plan shares major priorities with a separate budget proposal from Democratic Gov. Michelle Lujan Grisham, including a 7% pay increase for public education workers, plus additional taxpayer support for pensions and medical care.
Public employees at most state government agencies would receive similar pay raises in two stages, starting in April, under the Legislature’s plan.
Lujan Grisham promoted her spending proposals to combat hunger, recruit teachers, hire and retain state police officers and to establish a new state “climate change bureau” with 15 employees that would help reduce greenhouse gas emissions.
“These are investments that take us beyond the status quo, beyond decades of unnecessary austerity” said Lujan Grisham, alluding to her Republican predecessor.
Lujan Grisham also called for $50 million in spending to create a training academy for the film and media industries that would be run by a consortium of existing state colleges and universities.
General fund spending under the legislative proposal would increase to $8.46 billion, while the governor’s budget calls for nearly $8.45 billion. That’s up from $7.46 billion for the current fiscal year that ends in June 2022.
Under the Legislature’s budget blueprint, spending on public education alone would increase by more than 12%, or at least $410 million.
The state would funnel an additional $243 million to support Medicaid health care for the needy as the federal government winds down pandemic-related subsidies to the insurance program for people living in poverty or on the cusp. Medicaid enrollment has surged across New Mexico amid the economic disruption of the pandemic.
Public schools would be required to extend classroom learning time amid resistance from many teachers and parents, under the Legislature’s budget plan. At the same time, schools would get new flexibility to design their own mixture of extended school hours and additional calendar days.
The Legislature’s budget and accountability office has assembled extensive research showing that extending the school calendar or daily classroom time without switching teachers can lead to lasting academic advancement among students.
New Mexico’s education system routinely ranks last in the U.S. amid high rates of childhood poverty.
Lawmakers are seeking to resolve a court ruling that the state fails to provide adequate educational opportunities to poor and minority students and those with disabilities.
The state budget plan allocates $180 million to address educational shortcomings identified in the litigation, shifting more spending toward schools with high concentrations of “at-risk” students.
The state’s surge in income is linked primarily to the oil and natural gas industry and surging petroleum production in the Permian Basin that overlaps southwest New Mexico and western Texas.
Monthly earnings from natural resources development on state trust lands set a new record for December, adding $141 million to a permanent fund that uses investment returns to underwrite spending on public schools, hospitals and universities.
The budget proposals leave room for a possible reduction in current rates for gross receipts taxes, which add a charge on top of sales and business-to-business transactions. The tax currently varies from about 5% to more than 9% depending on local taxation.
Legislators indicated that a tax rebate proposal is likely, without further details.
Both budget plans set aside money equal to at least 30% of annual spending obligations – a hedge against any economic turmoil including a possible collapse in world oil prices and local petroleum production.
Democratic State Rep. Patricia Lundstrom of Gallup, chairwoman of the Legislature’s lead budget-writing committee, said that it’s the right time to boost spending with precautions.
“At this point, we feel that it’s just right, and it’s because we have a 30% reserve,” she said. “That’s just the way we roll.”
