SANTA FE, N.M. — New Mexico would make major new investments in early childhood education, industrial water recycling and drug addiction and mental health programs linked to crime concerns, under an annual spending proposal from Democratic Gov. Michelle Lujan Grisham.
The budget blueprint, released Thursday, would increase general spending by about $720 million to $10.9 billion, an increase of roughly 7% for the budget year that runs from July 2025 through June 2026.
The proposal would slow the pace of increase in state spending crucial revenues from local oil production are beginning to level off. New Mexico is the nation’s second-largest petroleum producer, behind Texas and ahead of North Dakota.
The Legislature is crafting its own competitive spending plan before meeting Jan. 21 for a 60-day session to negotiate the state budget. The governor can veto any part of the spending plan.
Aides to the governor said they are wary of potential disruptions to funding as President-elect Donald Trump prepares to take office on Jan. 20. New Mexico relies heavily on the federal government to support Medicaid and nutrition subsidies for households living in poverty or in poverty. the eve, but also for education funding, environmental regulations and a range of other programs.
“It is not lost on us that President Trump will be inaugurated the day before the start of the (legislative) session,” said Daniel Schlegel, the governor’s chief of staff.
Under the governor’s plan, overall spending on K-12 public education would increase 3% to $4.6 billion. Public schools face new financial demands as they expand school calendars in their efforts to improve academic performance, even as enrollment declines. The budget plan would support funding for free school meals and literacy initiatives, including tutoring and summer reading programs.
A proposed $206 million increase in early childhood education spending is intended to expand participation in preschool and child care at little or no cost to most families – especially those with children age 3 and younger. The increased spending comes not only from the state’s general fund, but also from a recently created multibillion-dollar fund for early childhood education and increased benefits from the Land Grant Permanent Fund — grants that come from oil industry revenues.
The governor’s budget proposes $2.3 billion in one-time spending initiatives, including $200 million to address water scarcity. In addition, Lujan Grisham is seeking $75 million to fund ventures aimed at purifying and recycling vast quantities of salty, polluted water from oil and natural gas production. A companion bill would impose a per-barrel fee on contaminated water.
Cabinet secretaries say the future of the state’s economy is at stake in the search for water treatment solutions, while environmentalists have been wary or critical.
The budget proposal includes pay increases totaling $172 million for state government and public school employees — a total increase of roughly 3%.
Leading Democratic lawmakers are proposing the creation of a $1 billion trust to underwrite future spending on addiction and mental health care in efforts to curb crime and homelessness. The accompanying legislation may force some people to undergo treatment.
The governor’s spending plan would also direct more than $90 million to Native American communities to support autonomous education programs that could include indigenous language preservation.
Lujan Grisham is asking for $70 million to quickly connect households and businesses in remote rural areas to the Internet via satellite, given a gradual buildout of the state’s fiber optic lines for high-speed Internet. The program would rely on Elon Musk’s satellite-based internet provider Starlink.