New Mexico Legislative Finance Committee releases $10.8B budget recommendation • Source New Mexico

New Mexico’s Legislative Finance Committee on Wednesday recommended $10.8 billion in spending for the 2025-2026 fiscal year from the state’s general fund, a 5.7% increase over 2025 planned spending.

In a statement, Sen. George Muñoz (D-Gallup), LFC chairman and chair of the Senate Finance Committee, said “fiscal restraint has been critical to our successful efforts to transform the revenue boom of the last few years into long-term support for state services.” He continued to say the lawmaker’s intended budget recommendation balances increasing New Mexican’s income, health care and quality of life while saving for the future.

Democratic lawmakers held a news conference Wednesday to present their recommendations, which include $3 billion in one-time spending: $50 million for regional recreation centers and quality of life grants; $350 million for transportation projects; $855 million for special projects and $1.7 billion in transfers to endowments and other funds.

The budget also allocates 45% of the $577 million increase in recurring general fund spending to public education, primarily toward the formula-based state equalization guarantee distribution to school districts and charter schools.

Other budget highlights include:

• a 3% increase, or $36 million to the Higher Education Department

• approximately $79 million more to the Health Care Authority, primarily for Medicaid

• an average 4% increase for higher education and state employee salaries— $134 million.

“New Mexico is in the best financial situation it’s ever been in its history,” Muñoz told reporters Wednesday. “If we do maintain responsible policies in New Mexico, we’ll continue on this path to growth for the next 10 years.”

Gov. Michelle Lujan Grisham’s budget recommendations, which she released in December, call for $10.9 billion in recurring spending overall, including $172 million for state employee and educator raises.

Senate Majority Leader Peter Wirth (D-Santa Fe) said the Legislature’s budget proposal is “not that far apart” from the governor’s proposed budget, “and that’s a really good thing going into a session.”

The committee’s plan allocates 33% of planned spending for reserves; the governor’s recommends maintaining reserves at 30.4%.

In a statement, Department of Finance and Administration Cabinet Secretary Wayne Propst said the agency released the executive budget recommendation “earlier than ever to give both the public and the Legislature ample time to review and understand our plan before the LFC presented theirs.”

“We appreciate the effort that went into the LFC recommendation and agree that both recommendations align on key priorities and are very close to each other.  Where differences exist, we look forward to working through them with the appropriating committees,” Propst said. “We’ve been proactive in building strong reserves and setting aside billions for the future. 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.”

Senate President Pro Tem Sen. Mimi Stewart (D-Albuquerque) also noted the budget includes a community benefit fund for electrification, transportation and clean jobs infrastructure designed to help local communities lower greenhouse gas emissions, and have healthier air, land and water.

Overall, House Appropriations and Finance Committee Chair Rep. Nathan Small (D-Las Cruces) said the budget focuses on making New Mexicans’ lives better immediately and in the next decade and beyond.

Wise spending in this budget will allow for sustained future raises for public servants like teachers, police officers, health care workers and others, Small said, “whereas in past cycles, it was a boom-and-bust approach.”

“We have an enviable opportunity in order to spend increased amounts today, while also saving for the future,” he said.