Lawmakers say some state agencies’ ambitious budget requests unlikely to be fulfilled

SANTA FE — After several years of record revenue growth, New Mexico state spending has surged to an all-time high.

But top legislators tasked with evaluating budget requests from state agencies that already total $616 million in additional spending for the coming year say it’s likely some agencies will not get their full funding requests met.

That could include the state Early Childhood Education and Care Department, which is seeking a $156 million funding bump — a more than 50% increase — to help pay for a universal child care initiative announced last month by Gov. Michelle Lujan Grisham.

After reviewing about 60 agency budget requests during legislative hearings last week, Rep. Nathan Small, D-Las Cruces, cited the ECECD budget request as one that will be closely scrutinized.

“Clearly we’re not going to fulfill every single dollar of those requests,” said Small, who is the Legislative Finance Committee’s chairman.

Sen. George Muñoz, D-Gallup, the LFC’s vice chairman, expressed frustration about the governor announcing the universal child care initiative before securing funding from the Legislature.

“I’m tired of them using federal funds and then coming back to the Legislature and trying to put us in a box,” Muñoz said.

While New Mexico is in better financial shape than other states like Colorado that have had to enact budget cuts in recent months, Small said the state is in a “more challenging world” due to looming federal budget cuts that are expected to specifically impact Medicaid and food assistance programs.

Already, the federal budget changes prompted Lujan Grisham to call lawmakers back to Santa Fe this month for a two-day special session.

Some lawmakers say additional state funds may have to be set aside to offset the federal funding impact, which could leave less money available for other initiatives.

“We absolutely have to take a very close and strategic look,” Small said in an interview this week.

Governor’s term could impact budget requests

Next year will mark Lujan Grisham’s final year as governor, as she is barred under the state Constitution from seeking a third consecutive term in office.

That backdrop could influence some legislators’ decision-making when it comes to budgetary issues.

Sen. Nicole Tobiassen, R-Albuquerque, said she’s wary of requests to fund large new initiatives during what will be Lujan Grisham’s final year in office.

“We tend to just throw large amounts of money at things without really having a clear strategic plan,” said Tobiassen, who is a member of the LFC and the Senate Finance Committee.

She also said she’d prefer to see lawmakers target more funding toward issues such as juvenile crime and the state’s troubled child welfare system.

Muñoz also expressed concern about some state agency budgets not being fully utilized after a new governor takes office in January 2027, which is halfway through the state’s next fiscal year.

“If you didn’t accomplish your goals in seven years and six months, you’re not going to accomplish them in just six months,” he said.

Meanwhile, Muñoz said some state agencies are seeking larger-than-usual special and supplemental budget appropriations in order to present largely flat base budget requests.

Rising insurance costs could impact pay hikes

The prospect of decreased federal funding for Medicaid and food assistance programs under the budget bill signed by President Donald Trump is not the only budgetary cloud on the state’s horizon.

For instance, rising health insurance costs for state employees and teachers could carry a price tag of roughly $100 million for the coming budget year, Small said. Lawmakers approved legislation during this year’s 60-day session to help subsidize health premiums for some state workers.

As a result of the increased insurance costs, Small said lawmakers could be forced to consider smaller salary increases for state workers. State employees received an average pay raise of 4% in July under this year’s $10.8 billion budget plan.

Members of the Legislative Finance Committee will hear more agency budget requests in committee hearings over the next two months before releasing a spending plan for the fiscal year that starts in July 2026.

Lujan Grisham will also release her own budget plan, and lawmakers will then use the two spending proposals as starting points as they work to craft a new budget bill during the 30-day session that starts in January.