SANTA FE, N.M. — On Wednesday, key lawmakers in New Mexico endorsed a proposed 5.7% increase in general fund expenditures for the next fiscal year. This plan prioritizes enhancing healthcare availability, improving public education, and expanding early childhood education and childcare initiatives aimed at relieving financial pressures on families.
The main budget committee in the Democratic-controlled Legislature suggested allocating an additional $577 million, bringing the total budget to $10.8 billion for the fiscal year from July 2025 to June 2026. Although revenue from the state’s robust oil production is beginning to stabilize, this sector continues to be a significant contributor to the state’s economy, positioning New Mexico as the second-largest oil producer in the United States.
Senate Majority Leader Peter Wirth from Santa Fe mentioned that this spending framework still accommodates a separate initiative aimed at establishing a $1 billion endowment. The goal is to utilize investment returns to enhance mental health and addiction treatment services amid a growing number of homeless individuals in both urban and rural areas, raising public safety concerns. Governor Michelle Lujan Grisham has highlighted crime and homelessness as primary issues for the upcoming 60-day legislative session beginning on Tuesday.
Speaker of the House Javier Martínez of Albuquerque articulated that the new budget proposal focuses on making life more manageable for families in New Mexico. He emphasized, “This budget is about more than just safety; it also aims to widen access to healthcare, including services for behavioral health and drug addiction.”
State and federal healthcare spending, primarily through Medicaid, is projected to rise by $3.3 billion, reaching a total of $15.5 billion, which signifies a 27% increase. New Mexico plans to implement a new assessment on hospitals to maximize federal Medicaid funding for its healthcare initiatives.
Senator George Muñoz from Gallup expressed confidence in New Mexico’s financial standing, especially in light of potential changes in federal Medicaid funding following the inauguration of President-elect Donald Trump. He stated, “Medicaid is the top concern for states nationwide. We have the resources and the capacity to respond should any changes occur.”
Funding for K-12 public education is set to rise by $263 million, approximately 6%, bringing the total to $4.7 billion. The budget proposal allocates $150 million for experimental programs aimed at improving literacy, elementary school math skills, and addressing poor attendance.
Moreover, distributions from New Mexico’s early childhood education trust fund, which has grown due to increased oil revenue, are anticipated to increase by $290 million (nearly 9%), totaling $854 million to further bolster childcare and associated healthcare services.
Governor Lujan Grisham is advocating for an even larger annual budget increase of 7%. The Legislature is responsible for crafting its own spending plan, and the governor holds the power to veto any specific provisions from the legislative proposals.
The budget recommendations include an average 4% wage increase for public sector employees across various state levels, including education. However, these proposals do not address potential tax reductions or incentives. Meanwhile, the Republican minority in the state House is pushing for the elimination of personal income taxes, which currently cap at 5.9% for high earners.
