By MORGAN LEE, ASSOCIATED PRESS
Leading New Mexico legislators recently recommended a 5.7 percent general fund spending increase for the coming fiscal year that emphasizes health care access, public school improvements, and early education and childcare programs that can boost household finances.
The lead budget writing committee to the Democratic-led Legislature proposed a $577 million increase to $10.8 billion for the fiscal year running from July 2025 to June 2026. A windfall in government income from petroleum production is slowing down, though far from over in New Mexico, the nation’s number two oil-producing state.
Democratic Senate Majority Leader Peter Wirth of Santa Fe said the spending plan leaves room for a separate proposal to create a $1 billion endowment and use investment earnings to expand mental health and addiction treatment services. That comes amid a proliferation of homeless encampments in cities large and small, with related concerns for public safety. New Mexico Governor Michelle Lujan Grisham has set crime and homelessness as a central focus for of the 60-day legislative session that begins Tuesday.
“This budget is not just about making our communities safer, this budget is about building more access to health care, including behavioral health and drug addiction treatment,” he said.
Combined state and federal spending on health care in New Mexico—principally Medicaid—would increase by $3.3 billion to $15.5 billion, a 27 percent jump. New Mexico is using a new assessment on hospitals to harness more federal Medicaid dollars for the health care sector.
Democratic State Senator George Muñoz of Gallup said New Mexico is well positioned financially if the federal government were to reduce Medicaid allowances after President-elect Donald Trump takes office.
“It’s the number one issue across states for everybody: Medicaid,” said Muñoz, the lead Senate budget negotiator. “We can react to that if it does happen… We have the ability, we have the money to react.”
Spending on K-12 public education would increase by $263 million, or 6 percent, to $4.7 billion. Additionally, the proposal sets aside $150 million for pilot programs to improve literacy, elementary school math proficiency, and lagging attendance rates.
Distributions from New Mexico’s early childhood education trust—an endowment built on a windfall in state income from oil production—would increase by $290 million, or nearly 9 percent, to $854 million to expand childcare and related medical assistance.
Governor Lujan Grisham is advocating for a slightly larger, 7 percent annual general fund spending increase. The Legislature develops its own competing spending plan, and Lujan Grisham can veto any and all provisions approved by legislators.
The Legislature’s budget recommendation includes an average 4 percent pay increase for public employees across state government, public schools, and colleges.
The budget proposals do not outline possible tax cuts or incentives. Republicans in the state House minority are advocating to eliminate personal income taxes that peak at 5.9 percent for top earners.
