On January 11, 2019, Governor Michelle Lujan Grisham submitted her very first budget for consideration by the New Mexico Legislature which starts on January 15, 2019.
The Governor’s proposed total budget for New Mexico is $7.1 billion.
The $7.1 billion budget increases state spending by $806 million.
The $806 million increase is a 12.7% increase over current levels.
More than 50% of the Governor’s proposed $806 million budget increase will go to the public education system.
Lujan Grisham’s budget plan calls for a more than a $500 million increase in public school spending.
The Lujan-Grisham 2019-2020 proposed budget includes increasing spending levels in the following areas:
Public schools: $3.2 billion, a 18% increase.
Higher education: $830.2 million, a 3.3% increase.
Medicaid: $1.01 billion a 6.7% increase.
Courts, district attorneys and public defenders: $306.3 million, a 3.5% increase.
Prisons: $321.4 million a 5.2 percent increase.
A detailed analysis of the Governor’s proposed budget can be viewed here:
NEW MEXICO LEGISLATIVE FINANCE COMMITTEE BUDGET
On January 14, 2019, the New Mexico Legislative Finance Committee (LFC) released its budget plan.
The budget plan would increase year-over-year state spending by $670.8 million, or by 10.6%, as opposed to the Governor’s $806 million, or 12.7% increase or a 2.1% difference between the plans.
The LFC’s budget would earmark more than three-fifths of the additional spending toward public schools statewide.
DIFFERENCES BETWEEN THE TWO PROPOSED BUDGETS
There are a number of major differences with the Legislative Finance Committee budget plan and the budget plan released by Governor Michelle Lujan Grisham.
The legislative budget does not appropriate an estimated $300 million to pay off a backlog in state film subsidies, an action that Lujan Grisham has proposed, and does not with eliminate an annual cap on film subsidy spending as the Governor has proposed.
In addition, the Democratic Governor Lujan Grisham has proposed earmarking $75 million for a state “closing fund” that’s intended to spur economic development by luring out-of-state companies to New Mexico and the Legislative Finance Committee budget plan only includes $4 million for the program.
State prekindergarten programs would get about $25 million more under Lujan Grisham’s plan than under the LFC proposal.
Lujan-Grisham under her budget proposes to increase New Mexico starting teacher pay from $36,000 to $41,000 per year, while the LFC budget proposes to starting teacher pay at $40,000.
SIMILARITIES OF THE PROPOSED BUDGETS
Both the Governor’s and the LFC budgets call for an increase in the public-school funding formula for at-risk students, including Native Americans, English-language learners and those with disabilities.
Salaries for teachers and state workers would go up under both plans.
Teachers would get a 5.5 percent raise under the LFC plan and a 6 percent hike under the governor’s plan.
Taxpayer-funded retirement contributions for teachers and state workers would increase under both plans.
Neither of the budget plans call for any additional lump sum payment into either the Educational Retirement Board or the Public Employees Retirement Association.
COMMENTARY AND ANALYSIS
Now the hard part begins to get a budget compromise between the Governor’s proposed budget and the LFC’s the proposed budget passed by the New Mexico legislature convening on January 15, 2019.
Democrat State Senator John Arthur Smith, the chairman of the powerful Senate Finance Committee, said much of Governor Lujan Grisham’s budget recommendation are in line with a separate Legislative Finance Committee plan.
However, Senator Smith still voiced concern about the possibility of a state revenue slowdown and the fiscal impact of the proposed $12 minimum wage for all state employees and public-school workers that the Governor wants by saying:
“I’m concerned their cost estimates on that are a little weak.”
Another big difference between now and the last 8 years is that New Mexico has a dramatic increase in revenues from the oil and gas industry giving the state upwards of $2 Billion in additional revenues.
Commenting on the increase revenues, Governor Lujan Grisham had this to say:
“For the first time in many years, our revenue projections are showing significant growth and an unprecedented amount of new money is available to invest back in our state.
Notwithstanding the tremendous spike in new monies available, the Lujan-Grisham proposed budget calls for $1.8 billion, or 25% of state spending, to be set aside in cash reserves in case the projected revenues from oil and gas production for the coming fiscal year don’t materialize.
Governor Michelle Lujan Grisham will be giving her first State of the State address on January 15, 2019, the opening day of the legislature, and no doubt will have an opportunity to set the tone for the 60-day session.
One thing is for certain is that words like “cooperation, communication, and compromise” will be articulated by Governor Michelle Lujan Grisham during her legislative session opening remarks as opposed to the past 8 years of confrontation and conflict and “my way or the highway” negativity of former Governor Susana Martinez.