Higher starting teacher pay, road repairs among highlights of $10.8 billion legislative budget plan

SANTA FE — New Mexico would boost starting teacher pay to $55,000 per year and increase spending on mental health and drug addiction treatment programs under a $10.8 billion spending plan unveiled Wednesday by a key legislative panel.

With the state riding the wave of an oil-fueled revenue boom, the budget plan would increase spending by $568.5 million — or roughly 5.7% — over current levels, starting in July.

That overall proposed spending growth is slightly less than under a separate budget plan released last month by Gov. Michelle Lujan Grisham, as the governor’s plan calls for a 7% budget increase for the coming year.

Both plans would provide pay increases for state employees and public school workers, though the raises would be slightly larger under the Legislative Finance Committee’s plan.

With a 60-day legislative session set to begin next week, Senate Majority Leader Peter Wirth, D-Santa Fe, said the dueling budget plans also align in many other policy areas.

“We’re not that far apart and that’s a really good thing going into the session,” Wirth said.

However, there are some key differences, as the legislative plan does not include funding for a $75 million strategic water supply proposed by the governor for buying brackish and produced water.

It would also appropriate $350 million for road repairs and other transportation projects, compared to $300 million under the governor’s plan.

Sen. George Muñoz, D-Gallup, the LFC’s chairman, said spending initiatives could still be evaluated as lawmakers begin crafting a new budget during the upcoming session.

He also described the legislative spending plan as prudent, saying spending growth of larger than 6% annually could lead to future budget woes.

“New Mexico is in the best financial situation it’s ever been in in its history,” Muñoz said during a Wednesday news conference at the Roundhouse.

Meanwhile, the top budget official in Lujan Grisham’s administration also said the two spending plans appear to feature more similarities than differences.

“Where differences exist, we look forward to working through them with the appropriating committees,” said Finance and Administration Secretary Wayne Propst.

“These next 60 days will test our collective resolve to resist unnecessary spending and stay focused on building a strong and stable financial future for New Mexico,” Propst added.

Spending growth expected to continue

New Mexico state spending has already grown by 45% since Lujan Grisham took office in 2019, as revenue collections have exploded to record-high levels.

Estimates released last month predicted legislators will have $892.3 million in “new” money available next year — a figure that represents the difference between projected revenue and current total spending levels.

The budget surplus is part of a multi-year revenue bonanza, fueled primarily by record-high oil and natural gas production in southeast New Mexico’s Permian Basin.

The state is the second-largest oil producer in the nation — behind only Texas — and oil and gas revenue make up about 35% of the state’s total revenue collections, according to legislative data.

While state spending has increased, lawmakers have also set aside millions of dollars from the revenue windfall in trust funds. The money in those funds is then invested for future use.

The Legislative Finance Committee’s budget plan would continue that approach, as it calls for $222 million to be transferred to a water project fund and $350 million for a new community benefit fund for local infrastructure projects.

While the spending plan does not specifically endorse the creation of a new trust fund to pay for expanded mental health and substance abuse treatment, it does include nearly $200 million in additional state spending for such programs, said Rep. Nathan Small, D-Las Cruces.

But Wirth said legislation will be filed in the Senate to create a new fund for such programs, with the goal of securing $1 billion to expand treatment options statewide.

Teacher pay levels on the rise again?

With New Mexico still lagging behind the rest of the nation in many national education measures, the legislative spending plan would increase starting teacher pay for the second time in three years.

The plan would raise starting teacher pay to $55,000, while also increasing the minimum pay rates for more experienced educators under the state’s three-tiered licensure system.

If approved, that would place New Mexico starting teacher pay at significantly higher than the national average of $44,530 per year, according to National Education Association data.

In addition to raising minimum starting teacher pay from $50,000 to $55,000 per year, the legislative plan would also provide average 4% pay raises for all educators and state workers. It would also largely cover the cost of rising health insurance premiums.

Senate Minority Whip Pat Woods, R-Broadview, who was the lone Republican legislator attending Wednesday’s news conference, said lawmakers are striving to spend taxpayer dollars wisely.

But he also said some of the spending proposals could increase the bureaucracy in state government.

“While every line item has its own significance, simply throwing money at the problems has not generated positive outcomes,” Woods said.

The 60-day legislative session begins Jan. 21.