Gov. Michelle Lujan Grisham released budget recommendations Monday that call for an 8.4 percent increase in state spending, seek to build upon last year’s investments in education and propose pay hikes for teachers and all state employees.
In her executive budget recommendation, Lujan Grisham proposed a general fund recurring budget of $7.68 billion for fiscal year 2021, and requested the state spend 75 percent of “new money” while targeting the remaining 25 percent for reserves.
“This budget, my second as your governor, represents the next step in our growth as a state, the continuation of the transformative work we began last year, my first in office,” Lujan Grisham wrote in the recommendation. “We are investing for tomorrow and delivering today.”
If approved, the plan would give New Mexico its second straight year of major budget increases fueled by unprecedented oil production in the southeast corner of the state. Total recurring revenue for the state’s general fund is projected to be $7.88 billion next fiscal year.
The Legislative Finance Committee is scheduled to release its budget recommendations on Tuesday. Both plans often serve as reference points for the Legislature, which will convene for a 30-day session Jan. 21.
Education is the biggest focal point of the governor’s plan, as it would receive nearly half of proposed new recurring spending. Her office is calling for a $74 million increase in early childhood education and care spending, which would include expanding programs such as prekindergarten, home visiting, child care assistance and family nutrition.
As for K-12, the executive branch is asking for a $200.3 million increase in public school spending, which would allow for a general fund budget of around $3.4 billion. That would include a 4 percent pay increase for all teachers and education personnel, which would cost $92.7 million.
In higher education, the budget recommendation includes $35 million for the governor’s proposed Opportunity Scholarship, which would help eliminate tuition and fees for New Mexicans attending public community colleges and universities.
“Last year, the Governor’s Budget provided for a moonshot in education,” said the recommendation, prepared by the state Department of Finance and Administration. “This year, the Governor’s Budget expands the moonshot to cover education from cradle to career, with more than 47 percent of all new recurring spending going toward the educational continuum, from early childhood to higher education.”
The administration also is proposing a one-time, $320 million appropriation to create a permanent fund for early childhood education. Legislation that would create such a fund already has been filed for the upcoming session.
The recommendations come a month after state economists slightly lowered their projections for next year’s revenue as they said oil production growth was beginning to slow. They said the state is projected to receive $797 million in “new money” — a step down from the $907 million that had been estimated last August.
Still, the executive branch said a 25 percent budget reserve level would be enough to withstand any two-year downturn in the economy or energy markets were such a slump to occur, according to stress tests carried out by state economists.
“Due to the dependence on global energy markets, which can be volatile from year to year, the state must be cautious and pursue fiscal sustainability strategies,” its recommendation said.
Department of Finance and Administration Secretary Olivia Padilla-Jackson echoed those sentiments in a meeting with reporters Monday, noting the 25 percent reserve level would protect the state from a downturn.
“The governor’s FY21 budget strikes a balance between meeting critical needs of today and investing strategically for future stability,” Padilla-Jackson said.
“We’re only recommending spending 75 percent of the new money,” she added. “We could recommend a lot more than what we have, but I think we’re restraining the budget in that way.”
The plan sets out significant increases in other areas as well, such as a Department of Public Safety budget that would allow for 60 new state police officers and an additional $6.3 million for state police recruitment and retention initiatives.
Notably, the recommendation includes a 3 percent salary increase for all state employees, at a cost of $27.6 million, as well as a 2 percent increase for higher education employees.
Lujan Grisham also is recommending $200 million in general fund spending on infrastructure such as roads, bridges and rail projects.
Spaceport America, too, would get a boost if the plan were approved, as it would get funding for eight additional full-time employees — a request its CEO made to legislators in October.