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UPDATED: LFC Budget Proposes $250 Million Increase

SANTA FE, N.M. — A legislative committee proposed a budget Wednesday that will increase spending by $250 million next year and provide higher take-home pay for public employees for the first time since 2008.

The recommendations by the Legislative Finance Committee will serve as a foundation for budget decisions when the Legislature convenes later this month.

The committee proposed spending nearly $5.7 billion on public education and general government operations in the budget year starting in July. That’s an increase of 4.6 percent from current spending.

The budget outlook is a sharp turnaround from recent years when lawmakers faced potential deficits and had to cut spending to comply with the state requirement for a balanced budget. State revenues are expected to grow next year as New Mexico’s economy recovers.

“We have done what I believe is a responsible job,” said Sen. John Arthur Smith, a Deming Democrat and committee chairman. “The problem that you have as budget people is doing what’s responsible versus what really polls well with the public.”

He said the budget tried to restore some cuts that have been made recently but avoid starting new programs that would need more money in the future.

If the committee’s proposals are enacted, state workers and educators will see a boost in take-home pay because worker pension contributions will drop by 1.75 percent and the government’s payments will go up by a similar amount, costing $50 million.

A budget-balancing law last year lowered the government’s payroll contributions for public employee pensions and forced workers to offset that. However, the law provided for the pension swap to end if New Mexico’s finances improved next year and that will happen based on the latest revenue projections.

The committee also proposed a 0.5 percent average pay increase for state workers, which will cost about $3.4 million. The increase covers workers for executive branch agencies, the judiciary, the Legislature and independently elected state offices.

The salary increase does not apply to public school and higher education employees, but lawmakers say they will benefit from a proposed $17 million annual boost in government contributions to an educational pension fund. That’s separate from the 1.75 percent pension contribution swap that covers two retirement programs, one for state workers and the other for educators.

Republican Gov. Susana Martinez “is optimistic that we will be able to find common ground with the Legislature” on the budget, spokesman Scott Darnell said.

But Darnell said, “As we are still recovering from the recession, the governor is concerned about the Legislature’s proposal to provide state employees with salary and benefit increases before we have fully funded education reform and job creation initiatives.”

Rep. Luciano “Lucky” Varela, D-Santa Fe and committee vice chairman, said lawmakers need to look during the upcoming session at possibly restoring some state government jobs that have been cut in recent years.

“My concern is that we provide enough human resources to be able to provide adequate services to the people of the state of New Mexico,” said Varela.

Other provisions of the committee’s budget propose:

—About $2.5 billion for public schools, a 3.7 percent or $89 million increase. Money is included for expected enrollment growth and increases in insurance costs. Schools account for the largest share of the committee’s budget, slightly more than $2 of every $5 in proposed spending.

—Nearly $756 million for higher education, a 5.4 percent or $39 million increase. The committee proposes to implement a new funding formula for colleges and universities, basing their funding partly on courses completed by students rather than classes enrolled in at the start of a school year.

—Almost $901 million for Medicaid, which provides health care for the poor and uninsured children. That would provide a 3.9 percent or nearly $34 million increase. About a fourth of New Mexico’s population receives health care through the program, which is jointly financed by the federal government.

Those three areas account for nearly three-fourths of the committee’s budget.

Early childhood programs, including pre-kindergarten, a reading program and subsidized child care, would get an additional $23 million.

“I think it’s the most important place that we can add money,” said Rep. Don Tripp, R-Socorro. “As we go forward, I hope we can increase that a little more each year because they are our future, the young kids of this state.”