Budget bill takes shape as session nears end

A retooled $7.4 billion budget plan is headed to the Senate floor after being approved Tuesday by the Senate Finance Committee. The bill would provide more money for higher education financial aid programs and a teacher pension fund than a House-approved budget plan. (Eddie Moore/Journal)

SANTA FE – A revised $7.4 billion spending plan that would tap federal stimulus money to replenish New Mexico’s unemployment fund and provide modest pay raises to teachers and state employees is headed to the full Senate with just days left in this year’s 60-day legislative session.

The Senate Finance Committee voted 6-4 Tuesday to approve the budget bill, which would increase state spending by 4.8% – or roughly $373 million – over current levels for the fiscal year that starts July 1.

Under the revised spending plan, more than $1.6 billion of the federal stimulus dollars New Mexico stands to get from a federal stimulus plan signed into law by President Joe Biden would be routed to a state savings account.

Of that amount, $600 million would then be appropriated to the state’s unemployment fund, which was depleted last year due to a pandemic-related surge in New Mexico’s jobless rate.

Without a cash infusion to shore up the fund, some legislators said, New Mexico businesses would face an increase in payroll tax obligations.

“That is really important for small businesses,” Sen. George Muñoz, D-Gallup, the committee’s chairman, said during a recent budget hearing.

In addition, $50 million would be appropriated for spending on Medicaid, the joint federal-state health care program that covers more than 910,000 New Mexicans.

New Mexico is awash in short-term money, as increases in oil production and market prices, along with the federal stimulus funds, have improved the state’s revenue outlook.

But Muñoz has cautioned that the state could face difficult decisions in future years, when the federal funds are no longer available.

The retooled spending plan approved Tuesday addresses most spending priorities outlined by Gov. Michelle Lujan Grisham, who can veto the entire bill or any portion of it.

Specifically, it calls for $16 million in state spending for an Opportunity Scholarship program that Lujan Grisham has championed, up from $5 million under a previous version of the bill.

Other changes would boost funding for the state Environment Department, whose funding was slashed in past years when lawmakers were grappling with a revenue deficit.

And the amended bill would provide a 1.5% pay increase for state agency and K-12 school employees, who got 1% raises for the current budget year.

The Tuesday vote in the Senate Finance Committee was along party lines, with Democrats voting in favor and Republicans in opposition.

Sen. Crystal Diamond, R-Elephant Butte, expressed concern about increased state spending amid the coronavirus pandemic.

“Eventually, the influx of federal COVID relief dollars will cease,” Diamond told the Journal. “Without responsible spending and saving, we could be facing record deficits in the very near future.”

If both chambers agree on the same version of the spending plan before the legislative session ends Saturday, Lujan Grisham will have until April 9 to act on the bill.

The Associated Press contributed to this report.


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