NM House endorses $1 billion budget plan to raise public salaries, expand free college education

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A panel of New Mexico House lawmakers endorsed a $1 billion increase in annual state general fund spending Wednesday to raise public salaries, shore up rural health care networks and expand no-pay day care and college. The increase would tap into a financial windfall linked to robust local oil and natural gas production.

The budget plan for the coming fiscal year also responds to an eventual economic transition away from fossil fuels in the nation's No. 2 state for oil production by investing up to $850 million in a trust to generate earnings and sustain public services in future decades.

Democratic state Rep. Nathan Small, of Las Cruces, chair of the lead House budget-writing committee, said that a large deposit to the state's severance tax permanent fund makes sense in the long term.

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"This one-time only (set-aside) pays for itself in roughly a decade," Small said. "At the same time, we're investing in agencies and prioritizing health care, education, infrastructure, economic development."

The House panel advanced the bill on a 14-3 vote. A House floor vote would send the bill to the state Senate for deliberation and possible adjustments. The Legislature has until March 18 to send a budget proposal to the governor.

The proposal would increase general fund spending by roughly 12% to $9.4 billion for the fiscal year starting in July 2023 and ending in June 2024. The budget plan includes a separate $1 billion increase in infrastructure spending and leaves room for about $1.1 billion in possible tax reductions or rebates.

The New Mexico state Capitol building is seen on Feb. 15, 2023, in Santa Fe. (AP Photo/Morgan Lee)

Democratic Gov. Michelle Lujan Grisham is advocating for $750 payments to tax filers and additional rate reductions for taxes on sales and services.

The budget proposal from House legislators includes an average pay increase of 5% for state employees and public school educators at an annual cost to taxpayers of roughly $234 million. Further pay increases are proposed for critical agencies and programs.

Lujan Grisham has urged legislators to boost teacher compensation by underwriting health care premiums by as much as $10,000 per person each year. The bill from legislators includes a more modest increase in medical care premiums for public school employees.

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Medicaid spending would increase by $218 million in an effort to retain and recruit health care professionals by raising reimbursement rates to medical providers, under the proposal.

Public spending on daycare and prekindergarten programs overseen by the Early Childhood and Education and Care Department would increase by $135 million, or nearly 70%.

The budget blueprint also includes increased annual spending of $291 million for agencies that oversee oilfield, water and environmental regulations. It devotes $120 million to tuition-free college for in-state students. That scholarship program was initiated in the fall of 2022 amid a surge in enrollment.

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Lujan Grisham has urged the Legislature to underwrite tuition-free college on a permanent basis. Small said the budget bill includes "guardrails" to monitor future increases in tuition.

The House budget plan would devote more than $100 million to business incentives and economic development initiatives, including $50 million for public-private partnerships on energy projects. Tourism spending would include an $11 million national publicity campaign

Republican state Rep. Cathrynn Brown, of Carlsbad, voted against the budget plan, objecting to the scale of spending on government programs.

"The overall spend and increase of 12% is just more than I would like to see," she said. "We’ve had successive years of large increases. And I’m looking into the future and thinking our best move right now is put more money into the permanent funds that will help us along for the future and take care of our next generations."