Dueling Budget Proposals
Presently, New Mexico appears to be one of those rare states that is flush with cash. Revenue from gas, oil and other sources makes for a healthy state financial situation for the 2024-25 budget year. The fiscal year begins July 1, 2024 and ends on June 31, 2025. Our legislature is in session for only one month this year, Jan 16-Feb 15.
Our governor has proposed a 9.9% budget increase or a $10.5 billion budget. The NM Legislative Finance Committee (LFC) proposed a more modest 5.5% increase for a proposed budget of $10.1 billion. The allocation for public education is the largest in both proposed budgets. They both recommend around $4.4 billion for education. The LFC budget calls for across-the-board raises for state employees totaling 4%. The governor’s pitch includes a 3% raise for all state employees, plus bigger raises for state police and corrections, probation and parole officers.
Both budgets endorse the New Mexico Legacy Fund, a dedicated state fund for conservation signed by Lujan Grisham in 2023. The major difference between the two budgets is that Governor Lujan Grisham recommends $250 million while the LFC recommended a $300 million appropriation. The LFC is recommending it as a way to set aside this year’s revenue as a long-term funding plan. According to the recommendation packet, the program would “offer a chance to invest in new ideas,” such as pilot programs.
The governor wants to put more than $3 billion toward healthcare initiatives to help subsidize patient care and draw more providers to the state. Hundreds of millions would also be allocated for economic development investments, roads and infrastructure, and shoring up the state’s water supply.
Lujan Grisham’s proposed budget includes provisions to keep more than a third of state revenues in reserve, in case of revenue shortfalls in the future. The New Mexico Constitution requires a balanced budget. However during the 2008 recession and an oil bust in the early 2010s, reserves proved insufficient to cover the losses.
Education Funding
As usual, public education is the biggest area for funding. More than $4 billion would go toward K-12 education to expand early childhood programs, train educators and boost teacher pay. A 7% budget increase from last year is being proposed for the Department of Public Education
Higher education would receive $1.327 billion that would sustain tuition-free college and expand successful education and workforce initiatives. This is about a 4.5% ($57.5 million) increase from the current year.
Other Budget Priorities
Other high priority areas of the governor’s proposed budget include Water & Natural Resources, Housing and Homelessness, Health Care, Behavioral Health & Child Well-Being, Public Safety and Economic Development & Infrastructure.
Revenue
The governor’s budget projects $12.548 billion in revenue for the 2024-25 fiscal year. This amount is down slightly from the $12.749 billion estimated for the 2023-24 fiscal year. However, the current estimate is well above the actual 2022-23 revenue of $10.890, an increase of $1.658 billion.
Analysis
The bottom lines of the “dueling budgets” are not really that far apart. But we all know the “devil is in the details”. $400 million difference out of a $10 billion budget, or about 4% should not cause huge riffs. The public comment periods, jockeying by individual state departments and agencies, and additional forecasts may change internal budget allocations and perhaps, even the two bottom lines presented by the governor and the legislature. With Democrats in control of the legislative and executive branches of government, one would think they could work this out. Fingers Crossed!
*Much of the details and discussion of the budget comes from Pete Dinelli’s Blog of 1/12/24. Some of the figures come from the governor’s office web page.