Governor approves state spending plan, tax omnibus and capital outlay packages

On her final day to approve legislation passed during this year’s session, Gov. Michelle Lujan Grisham approved the state’s $10.21 billion budget, her office announced Wednesday.

In a news release, Lujan Grisham’s office touted the budget, about a 7% increase over the current fiscal year’s, as a “fiscally responsible spending plan that makes critical investments in New Mexico.

“The budget I signed today represents a strong investment in New Mexico’s future with funding to improve literacy, help keep New Mexicans safe, expand affordable housing, raise teacher pay, assist tribal governments and much more,” the governor said.

Lujan Grisham had until noon Wednesday to sign or veto the 72 bills on her desk, or to line-item veto measures appropriating money. Pieces of legislation she did not act on were automatically pocket-vetoed.

Along with the budget, Lujan Grisham signed the tax omnibus and capital outlay packages. But none of those three pieces of legislation escaped Lujan Grisham’s line-item veto pen.

One of the most notable provisions the governor struck would have prohibited the state Public Education Department from spending money on implementing a requirement that public schools spend at least 180 instructional days with students per year.

Vetoing that language appears to lay the groundwork for the PED to move forward on a measure educators from around the state lambasted late last year. The governor, who has expressed strong support for the measure all year, wrote only that the language would “interfere with the executive managerial function.”

Ahead of the budget’s approval, National Education Association New Mexico President Mary Parr-Sánchez expressed concern about the 180-day rule possibly moving forward, saying “there is a great majority of people that believe that would not be in the best interest of children, because it’s going to drive educators out of the field.”

Lujan Grisham, however, did veto a provision that would have prohibited the PED from approving the budgets of schools to operate on four-day school weeks during the coming school year that were new to such schedules. Many of the critics of the department’s proposal cited concerns about losing four-day weeks.

A new funding mechanism in the budget was also edited. Lujan Grisham signed a bill to create a government accountability trust fund. The state is flush with cash, representatives of the Legislative Finance Committee said when pitching the fund. The trust is intended to stretch that money. The fund would float funding for pilot programs evenly over several years, while monitoring the programs’ progress.

But the governor struck language directing the Department of Finance and Administration and the LFC to approve appropriate progress measures, including quarterly reports of certain metrics.

The tax omnibus package, which included personal income tax bracket changes, a credit for people whose houses were destroyed by wildfires in 2021 and 2023, tax deductions for pre-kindergarten and child care costs, and more, had just one line-item veto.

Proponents said the personal income tax bracket changes could bring relief to the lowest-income New Mexicans, who would see the largest savings on their filings.

Lujan Grisham applauded that the Legislature had addressed “sustainability concerns” over last year’s tax package, which she said led her to line-item veto large portions of the package.

This year, Lujan Grisham struck only a severance tax exemption for stripper wells — oil wells near the end of their lives — which was scrutinized on the House floor in February. While some representatives called it an “imperfect way” to bring some wells into compliance, others expressed “heartburn” over the tax relief.

But Lujan Grisham said it would disproportionately help large companies.

“Although I appreciate the intent behind this measure … the exemption should be limited to small and independent operators,” Lujan Grisham wrote in her line-item veto message.

The majority of the capital outlay bill, which included $483 million in capital outlay state agency projects and $523 million in local public body projects, remained largely intact. But Lujan Grisham vetoed approximately $557,000 in general fund projects, including:

• Santa Fe: $80,000 for the service road and pedestrian walkway at the Santa Fe Botanical Garden at Museum Hill
• Silver City: $100,000 for a portable building for the Guadalupe Montessori school
• Jicarilla Apache Nation: $2,000 to install a phone system for the Dulce Fire Department
• Albuquerque: $200,000 for Netherwood and Central Albuquerque parks
• Santa Fe: $175,000 to secure a space for the Santa Fe Indigenous Center

In her veto message, Lujan Grisham wrote she vetoed projects that “lack proper planning or are not ready to proceed,” as well as appropriations under $10,000, writing that local governments should have alternative sources for smaller projects — and if funds are insufficient, legislative sponsors should alert her.

Lujan Grisham signed almost all the bills that made it to her desk. She vetoed one bill that would have set aside $82 million per year from the severance tax bonding fund into the severance tax permanent fund. It passed unanimously in both the House and Senate.

In her veto message, Gov. Michelle Lujan Grisham wrote she wasn’t certain if the measure is necessary.

“It is important we continue to save for the future; and we have been doing a lot of good work in this area, the results of which I would like to see more fully realized before making additional distributions,” Lujan Grisham wrote.