New House budget wrangles record revenue again, but experts warn it won’t last much longer

See what the House budget looks like for nine major spending areas

The House Chambers inside the Roundhouse on Jan. 10, 2024. (Photo by Anna Padilla for Source NM)

A statewide spending plan unveiled Monday by House lawmakers recommends the smallest increase in spending in several years, its drafters acknowledging the oil and gas boom that has filled and overfilled New Mexico coffers in recent years could soon dry up.

The House Appropriations and Finance Committee approved the budget by a vote of 13-3, overcoming “no” votes by members concerned about the amount to be spent on road repairs and legislative staff salaries. It will soon be considered by the full House.

The committee’s recommended general fund budget is $10.18 billion, an increase of $621 million, or 6.5%, over last year. It’s less than the $10.5 billion Gov. Michelle Lujan Grisham wants to spend in the next fiscal year, but slightly more than what the nonpartisan Legislative Finance Committee recommended.

What the budget (summary here) represents, according to Committee Chair Nathan Small (D-Las Cruces), is an effort to wisely spend the projected $3.4 billion budget surplus while also limiting spending growth to prevent sharper cuts in the future. He touted it as the product of hundreds of hours of work and the most transparent budget process in history, thanks to the amount of public comments the committee solicited in recent months.

Slowdowns in oil and gas means smaller growth in N.M. revenues

“We’ve chosen to do that all in this public forum, which has meant a longer time, more questions. I think it also reflects in a much better budget that we see here today,” Small told committee members. “I think we can be confident that we are spreading our surplus in a responsible way, making sure that not only core functions, but the things that are going to grow, diversify, and set our economy and our education system up for success are there in a very strong way.”

In three of the last five years, lawmakers increased the state’s operating budget more than 10%. 

But budget surpluses like this year’s, driven largely by oil and gas taxes and royalties, are projected to plateau beginning next year and decrease over the next decade, according to state economists.

LFC Director Charles Sallee cautioned lawmakers to consider that plateau this year, even though the state isn’t yet feeling the squeeze of any expected reductions in oil and gas revenues. Those projected revenues, plus recent legislation and other global economic forces, mean lawmakers could soon have to make harder choices on where to spend taxpayer money.

Some time soon, Sallee told lawmakers, a responsible state budget will only grow by $250 million a year. The House committee’s budget makes good use of record revenues while also acknowledging billion-dollar surpluses may soon be a thing of the past, he said.

“And the more that you spend today, whether through tax code changes or through the recurring budget, the faster that date moves up,” he said. “This 6.5% increase keeps that date at bay.”

Even with just a 6.5% increase, Small touted the budget as the biggest-ever investment in healthcare in the state, and Sallee said the House’s spending plan strategically invests in three-year pilot programs for state programs to allow them to be evaluated before requiring bigger spending commitments. The budget also provides for a raise between 2% and 4% for all state workers.

Below are more details about how the House committee wants to fund nine important functions of state government.

Health

Under the House plan, the state would spend about $13.2 billion in recurring money each year on health care, along with more than $206 million in one-time spending called “special appropriations.”

That figure includes the budgets for the newly created Health Care Authority, the Department of Health, the Retiree Health Care Authority, the Office of the Superintendent of Insurance, the Vocational Rehabilitation Division of the Public Education Department, the Miners’ Hospital of New Mexico, the Workers’ Compensation Administration, the Medical Board, the Board of Nursing and the Governor’s Commission on Disability.

The House’s budget for health agencies is about $17,000 larger than the LFC’s recommendation, but $250,000 smaller than Lujan Grisham’s.

Prisons

Prisons would get $372.8 million each year, along with $16.2 million in special appropriations. 

That includes spending for the New Mexico Corrections Department, the juvenile justice facilities run by the Children Youth and Families Department, the Sentencing Commission and the Parole Board.

The House budget for the Corrections Department is the same as LFC’s proposal but nearly $21 million smaller than Lujan Grisham’s.

Courts

Overall, the House budget for the state’s judicial branch is $5.8 million larger than the proposal from the Legislative Finance Committee, but about $11,000 smaller than Lujan Grisham’s.

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The courts would receive $294.7 million annually, along with more than $26 million in special appropriations.

That includes every district court in the state, the Bernalillo Metropolitan Court, the Court of Appeals, the Supreme Court, the New Mexico Compilation Commission and the Judicial Standards Commission.

Policing

The House budget for public safety is $2 million larger than the LFC suggestion, and $25,000 smaller than Lujan Grisham’s.

Police and military would get $240.3 million each year, and more than $29 million in special appropriations.

That includes the Department of Public Safety, the Department of Military Affairs and the Office of Military Base Planning and Support.

Prosecution

Prosecutors would receive $147.8 million every year, and about $14.4 million in special appropriations.

That includes all 14 district attorneys’ offices across the state, the Administrative Office of the District Attorneys and the New Mexico Department of Justice.

Legal defense

Public defenders and family advocates would get $87.2 million each year, along with nearly $2.6 million in special appropriations.

That includes the Law Offices of the Public Defender and the Office of Family Representation and Advocacy.

Housing Trust Fund

The four parties who have so far recommended spending to address New Mexico’s housing crisis have offered four very different numbers for how much that will cost. 

Sen. Nancy Rodgriguez (D-Santa Fe) is asking lawmakers to deposit $500 million in the state’s Housing Affordability Trust Fund, overseen by the New Mexico Mortgage Finance Authority. She doesn’t expect the Legislature to ultimately fulfill that request, but she said the trust fund has proven itself effective with a little more than $60 million it’s received over the last 17 years.

The trust fund uses public money to support an array of government, nonprofit and private entities with developing affordable housing complexes, helping first-time buyers afford down payments and other programs. Officials claim the program has a 16-to-1 return on investment.

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Lujan Grisham is asking the Legislature to put $250 million in the fund.

But the House appropriations committee budget asks for $44.5 million for the fund, which is even less than the LFC’s $50 million recommendation.

Education

The newly-released House education budget largely reflects the Legislative Finance Committee’s recommendations, bucking some of Lujan Grisham’s proposals.

Among notable absences is the governor’s proposed literacy institute, for which she requested $30 million to build. The Legislative Finance Committee recommended $3 million for planning and design.

The House budget recommends the following investments in line with both House and Senate Education Committee priorities:

  • $49 million for literacy, career technical education and community school programs
  • $14 million in early literacy support
  • $55 million for culturally relevant and bilingual materials
  • $62.7 million for 2% salary increases, bringing all school personnel up to $15 per hour
  • $43 million to expand early childhood care
  • $750,000 to support adult literacy programs
  • $2 million for attendance programs

The budget proposal states a school district’s operational budget will not be approved if there are fewer instruction days compared to last year or if they are only in session four days per week. Both align with a proposed mandatory 180-day attendance rule, which has drawn criticism from rural and tribal leaders.

Lujan Grisham also asked for $58.1 million for structured literacy programs, which she announced at a press briefing two days into the session. The House budget would grant more toward early literacy programs than the Legislative Finance Committee proposed.

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“The sad issue is that New Mexico has waited a little too long to robustly take the science of reading and make it universal,” Lujan Grisham said. “Most of the educators in this room have been navigating it on their own for so long.”

Natural resources

Lawmakers are poised to raise funding for staffing state environmental agencies, and fund significant one-time programs for pollution accountability, “forever chemical” mitigation and developing a surface water and groundwater permitting program. 

In total, House Appropriations and Finance recommended a $201 million total budget for the New Mexico Environment Department, smaller than the $215 million ask from the governor.

The 19% increase will go toward staff salaries and rental costs, and help “bolster “ the agency’s regulatory responsibilities, according to the budget summary.

In one-time appropriations, House lawmakers agreed to give the environment department $1 million for pollution accountability, $1 million to “develop and implement initiatives that protect the public” from per- and polyfluorinated alkyl substances – also known as “forever chemicals.”

The surface water discharge permitting program is getting a boost. State officials raised concerns over the vulnerability of New Mexico’s waters after the U.S. Supreme Court last year changed what constitutes pollution-protected waters.

In addition to carrying over $680,000 from last year and accepting the executive’s ask for another $600,000, lawmakers added $7 million from the water quality management fund to develop and implement state surface water and groundwater permitting programs.

State lawmakers increased the Energy, Minerals and Natural Resources Department budget by 12% to $188 million. That’s smaller than the governor’s $198 million request.

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In one-time money, the House committee allocated $250,000 for legal counsel, $1.7 million to match federal funds, an additional $2.5 million to address inspection and compliance backlogs in the oil conservation division and $225,000 to create a Rio Grande trail commission office.

Lawmakers approved another $10 million for a contract to provide low-interest loans for low-income communities for wind, solar, weatherization and geothermal energy intended to reduce carbon emissions.

There’s another $5 million for geothermal projects – half for a loan fund, and the other $2.5 million for development – contingent on several pieces of legislation passing.

For the New Mexico Office of the State Engineer, the House Appropriations and Finance Committee followed the LFC recommendation of $49.5 million, just under the $50 million request from the executive request. The agency requested a flat budget for most of its programming, but asked for $3.4 million for 38 more staff to implement and negotiate water rights. The Legislative Finance Committee recommended a $2.2 million increase from the General Fund.

Some one-time funds include $20 million over the next two years to settle water rights disputes with Pueblos and tribes.

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Patrick Lohmann
Patrick Lohmann

Patrick Lohmann has been a reporter since 2007, when he wrote stories for $15 apiece at a now-defunct tabloid in Gallup, his hometown. Since then, he's worked at UNM's Daily Lobo, the Albuquerque Journal and the Syracuse Post-Standard.

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Austin Fisher
Austin Fisher

Austin Fisher is a journalist based in Santa Fe. He has worked for newspapers in New Mexico and his home state of Kansas, including the Topeka Capital-Journal, the Garden City Telegram, the Rio Grande SUN and the Santa Fe Reporter. Since starting a full-time career in reporting in 2015, he’s aimed to use journalism to lift up voices that typically go unheard in public debates around economic inequality, policing and environmental racism.

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Megan Taros
Megan Taros

Megan Taros is a freelance reporter for Source NM. She is born and raised in the harbor area of Los Angeles where she began her career covering higher education and local government. She previously launched the South Phoenix beat at the Arizona Republic where she covered race and equity in one of the largest communities of color in the state. She also launched the Latino affairs beat at the Times-News in Twin Falls, Idaho. She is a graduate of the Columbia University Graduate School of Journalism where she covered racial and economic inequality in Queens, New York.

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Danielle Prokop
Danielle Prokop

Danielle Prokop covers the environment and local government in Southern New Mexico for Source NM. Her coverage has delved into climate crisis on the Rio Grande, water litigation and health impacts from pollution. She is based in Las Cruces, New Mexico.

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