Jan. 15—State lawmakers on Wednesday unveiled what would be a record-high $10.8 billion spending plan for the upcoming fiscal year that includes higher starting salaries for teachers and average 4% pay increases for state employees.
“New Mexico is in the best financial situation it’s ever been in its history,” Sen. George Muñoz, a Gallup Democrat who chairs the Legislative Finance Committee, said during a news briefing at the state Capitol.
“The budget reflects a thoughtful approach to making investments that will benefit our children, our grandchildren, by prioritizing education, health care, jobs and opportunity,” he said.
The Legislative Finance Committee’s budget recommendation for fiscal year 2026 represents a 5.7% — or $577 million — increase over the current year’s budget.
Lawmakers are recommending an additional $3 billion in one-time spending, which includes $1.7 billion in transfers to endowments and other funds.
The spending plan, released in advance of the 60-day legislative session that starts Tuesday, is slightly lower than Gov. Michelle Lujan Grisham’s budget recommendation, which includes $10.9 billion in recurring general fund spending. She also has proposed $2.3 billion in one-time spending.
Senate Majority Leader Peter Wirth, D-Santa Fe, said he feels as if the two budget recommendations are “not that far apart.”
“That’s a really good thing going into a session,” he said.
Wayne Propst, Cabinet secretary for the Department of Finance and Administration, said the Lujan Grisham administration released its executive budget recommendation “earlier than ever” to give the public and lawmakers enough time to review and understand her plan before the LFC presented its proposal. The governor released her spending plan Dec. 12.
“We appreciate the effort that went into the LFC recommendation and agree that both recommendations align on key priorities and are very close to each other,” he said in a statement.
“Where differences exist, we look forward to working through them with the appropriating committees,” he added. “We’ve been proactive in building strong reserves and setting aside billions for the future. These next 60 days will test our collective resolve to resist unnecessary spending and stay focused on building a strong and stable financial future for New Mexico.”
Differences in the two spending plans include pay increases for state employees and reserves.
While the executive budget recommendation calls for a 3% compensation increase for state employees, the LFC’s calls for average 4% pay increases. The LFC’s spending plan would maintain reserves at 33%, while the governor’s would keep them at 34.2%.
Asked about the main differences between the two budget proposals, Muñoz cited reserves and said primarily “in behavioral health and in the way we did some road infrastructure.”
“We’re pretty close; that’s the closest we’ve ever been,” he said. “I mean, [a 5.7% budget increase] really keeps New Mexico whole for the next governor.”
Muñoz noted governors come and go.
“We’re looking long term, not short term,” he said.
Rep. Nathan Small, a Las Cruces Democrat who serves as vice chair of the committee, said the legislative budget proposal is focused on making New Mexicans’ lives better “immediately” and creates a path for “an elevated quality of life” in years to come.
“We know that with this budget and its prioritization of health care, housing, education, infrastructure and public safety, we’re going to be doing that,” he said. “We have an enviable opportunity in order to spend increased amounts today while also saving for the future.”
Wirth echoed the sentiment, saying the spending plan represents an “extraordinary opportunity” for the state.
“Our neighbors to the north in Colorado are facing a $700 million deficit as they start their session; look where we are,” he said. “This budget is a responsible investment in New Mexico’s future.”
Wirth said the spending plan continues the state’s practice of using “now money to make future money,” referring to the creation of trust funds that spin off revenue.
“Coming into the session, we’re going to have a big focus on behavioral health, and the framework for that is built into this budget,” he said. “There will be a proposal for a new behavioral health trust fund and also an infrastructure bill … using nonrecurring money to address the immediate needs of our citizens.”
Small, however, said the budget recommendation includes “a very strong start and a down payment” of more than $200 million for behavioral health but “there is not currently a trust fund in the LFC framework.”
Wirth said legislation to create a $1 billion trust fund for behavioral health will be considered during the session.
“The interesting thing when you’re using nonrecurring money, there’s different buckets throughout the budget process, and I think the idea is to hopefully get that up to a billion-dollar permanent fund,” he said. “That may not happen the first year, to get to the full amount. We’ve kind of loaded these up over time.”
Lawmakers from both sides of the aisle took turns at the lectern touting different aspects of the budget, which includes funding for state agencies that assumes health care premiums for their employees will go up 10%. The funding will cover the employer share of the increased costs.
House Speaker Javier Martínez, D-Albuquerque, said he was “proud” of the budget recommendation.
“It’s a budget that will continue to invest in New Mexicans across the state,” he said. “This is about making life more affordable for New Mexico families. This budget is about making our communities safer. This budget is about building more access to health care, including behavioral health and drug addiction treatment, which we need all over the state. As we enter the 2025 legislative session next week, this budget really is the guide and the driving force of an entire session.”
Follow Daniel J. Chacón on Twitter @danieljchacon.