Under the committee’s spending plan, reserves would be 30 percent of planned spending, safely above the levels that served the state well during the plunge in income at the start of the pandemic.
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Friday, January 5, 2023
The Legislative Finance Committee today released a budget recommendation for the 2024-2025 fiscal year that calls for spending $10.1 billion from the state’s general fund, a 5.9 percent, or $566 million, increase over FY24 planned spending.
“After two years of record-setting income, the FY24-25 budget is a reminder that we must meaningfully invest in programs that truly help and work for New Mexico, while simultaneously protecting the state from future revenue shortfalls,” said Senator George Muñoz, LFC chairman and chair of the Senate Finance Committee.
“The committee’s recommendation ensures the state never has to ride the oil and gas rollercoaster again by prioritizing essential growth in services that are proven to improve the lives of New Mexicans, creating expendable trusts to address critical future funding needs in the state, and most importantly, ensuring we maintain robust reserves to weather any future rainy days we may experience.”
Senate Finance Committee Chairman George Munoz
Under the committee’s spending plan, reserves would be 30 percent of planned spending, safely above the levels that served the state well during the plunge in income at the start of the pandemic. The spending plan also leaves money on the table for additional initiatives and possible tax code reforms.
“The LFC budget recommendation reflects important conversations we had with community leaders, advocates, and experts as we traveled the state during the interim. It addresses New Mexico’s needs and opportunities and creates the framework for the decisions that we will make in the upcoming legislative session,” said Representative Nathan Small, vice chair of LFC and chair of the House Appropriations and Finance Committee.
“As state lawmakers, it’s our responsibility to make sustainable investments that help our state chart a brighter future, while also putting these dollars to work for New Mexicans in meaningful ways today and maintaining robust reserves.”
House Appropriations and Finance Committee Chair Nathan Small
About a quarter of the $566 million increase in general fund spending, almost $134 million, would be used to maintain services in the Medicaid Program in the face of declining federal support. The recommendation for the Health Care Authority, formerly the Human Services Department, also expands support for rural healthcare by increasing Medicaid payments for rural providers and funding the start-up costs of providers moving to rural areas.
“Because of the lack of healthcare access, rural communities have higher mortality rates, higher rates of chronic disease, and poor maternal and child healthcare. The steps the committee is proposing to improve healthcare access are encouraging,” said Representative Gail Armstrong, a leading Republican member of LFC.
General fund spending on public schools, a priority for the committee, would increase by $115 million, representing about 20 percent of the total increase in general fund spending. Spending on kindergarten through high school would total $4.42 billion under the committee plan, a 5.8 percent, increase from FY24 levels.
House Appropriations and Finance Committee Ranking Member Gail Armstrong
The recommendation also includes $243 million in nonrecurring, education-related appropriations, including $52 million from the public education reform fund, to address issues highlighted in the Martinez/Yazzie education sufficiency lawsuit.
The proposal provides a total of almost $783 million for early childhood services, including $250 million from the early childhood trust fund to expand the Childcare Assistance subsidy, support Medicaid-funded services to families with newborns, and implement prekindergarten quality supports.
The Children, Youth and Families Department woulds be the beneficiary of a $20.1 million multiyear expandable trust for child welfare workfoce [sic] development, prevention and early intervention programs and accountability and compliance. The committee plan anticipates that federal funding would be available for supporting these programs after state funding runs out, assuming the programs are implemented appropriately.
The spending plan includes a general fund increase for district courts and Metro Court in Albuquerque of 3.3 percent and increases the general fund appropriation for the Administrative Office of the Courts by 9.6 percent. General fund revenues for district attorneys statewide would increase by 4 percent, while general fund support for the Public Defender Department would increase by 5.4 percent. The Department of Public Safety would receive a 3 percent increase and the Corrections Department general fund would decrease by 3.3 percent.
The committee recommendation also includes an additional $223.4 million in general fund revenue for compensation increases for state, public school, and higher education employees. Under the plan, state employees would get an average 4 percent increase. Further, the plan includes $945 million—$891 million from the general fund—for special, supplemental, and deficiency appropriations, including $300 million for the new expendable trust, which would be called the government accountability and improvement trust fund.
The 30-day legislative session starts January 16.