Budget clears state Senate with bipartisan support

SANTA FE — The state's enormous budget of more than $10.19 billion passed the full Senate on Monday afternoon with bipartisan support. Agreement on both sides of the aisle can be a rare occurrence when talking about how to set aside dollars for all of state government.

Senators voted 31-10 to move the budget to its next step, which is the House. If approved by the House, the legislation goes to Gov. Michelle Lujan Grisham, who has the power to veto individual line items.

The Senate amendments added $31.6 million to the House version of the budget that passed the floor earlier this month, according to the Legislative Finance Committee.

Including the feed bill, an administrative measure to fund the Legislature, the drafted budget sits at just more than $10.22 billion. That's nearly 7%, or $653 million more, than fiscal year 2024.

The proposed spending plan garnered support from Democrats and Republicans, even those who haven't voted for proposed budgets multiple times in the past. Many senators said there are protections in the latest budget, such as those affecting trust funds and reserves, which will help protect New Mexico when the currently booming oil and gas industry faces a downturn.

Oil and gas dollars fund a significant portion of the state's general fund.

Lujan Grisham last week said the current legislative session has been better for getting financial packages lined up. She said it's an effective and sustainable budget, even with its increase.

"The key issues — money for public safety, money for the environment, money for education, money for health care — are embedded squarely in the budget," she said.

Sen. William Sharer, R-Farmington, said on the Senate floor Monday that he understands why some senators would vote against the budget, even though he voted for its passage. Nine Republicans and one Democrat voted against the measure.

"There's certainly things that I would've done different, but in this particular case, I think that we did quite well," Sharer said.

Education, CYFD

The largest slice of the general fund would go to public schools, which are slated to receive about $4.3 billion next fiscal year.

That includes more than $94 million to give a flat 3% raise to all public school employees, an amount that was trimmed by a Senate Finance Committee amendment this weekend. Before Sunday, public school employees were potentially looking at a total average of 4% raises.

Prior to the session, the Legislative Education Study Committee, LFC and the executive all offered different recommendations for public school worker raises, with the former suggesting the heftiest at 6%. But as of Monday, the executive's recommendation of a 3% raise had prevailed.

"Our people are furious," American Federation of Teachers New Mexico President Whitney Holland told the Journal. "... It's hard to reconcile. Why is there a $3 billion surplus, but we're having to beg for an extra 1%?"

In a written statement, spokeswoman Maddy Hayden said the governor's office was waiting for the results of a study analyzing educator compensation to have a "much more precise analysis of salary adjustments that are needed to ensure equitable salaries."

She further noted that the administration "has championed raises for teachers every year since 2019 leading to an average salary increase of nearly 28%."

Holland also criticized the budget bill's omission of an effort to increase the minimum salaries of full-time public school employees to $30,000. Notably, this would have included educational assistants, who last year saw their minimum salaries more than doubled to $25,000.

But some said that still wasn't enough, and the LESC endorsed House Bill 199 to raise that salary floor again. That effort, though, did not materialize in the budget bill, and HB 199 stalled in the House Appropriations and Finance Committee.

That all being said, Lujan Grisham last week described HB 2 as providing a "very healthy education budget."

The version the Senate greenlit on Monday includes $30 million for summer reading intervention programs, $14 million for early literacy and reading support and $5 million to train secondary educators in the science of reading.

During Monday's debate on the bill, Sen. Craig Brandt, R-Rio Rancho, said he wants more accountability following the efforts of the New Mexico Public Education Department, asking how the budget and Legislature will hold schools accountable, when reading and math proficiency is atrocious.

However, Sen. Mimi Stewart, D-Albuquerque, said reading proficiency rates are actually making some gains — particularly for Native American students — following more training for teachers.

Senators also pointed out the inefficacy of the state's Children, Youth and Families Department. The only Democrat to vote against the budget, Sen. Bill Tallman, D-Albuquerque, said CYFD is only getting a fraction of the money it needs while in crisis, less than a 1% increase. Brandt asked how the budget is addressing the needs at CYFD.

Sen. George Muñoz, D-Gallup, said the budget as drafted would have the state track work at CYFD, even when a lot of people didn't want that, including the executive. He said he wouldn't give in on that issue, and Brandt agreed on its importance.

"I'm glad we're doing that right now, and let's just continue to work on those issues," Brandt said.

Saving for the future

Senators boasted of the trust funds included in this budget, a way to safeguard dollars when oil and gas aren't bringing in booming revenues for the state.

The budget would send $1.3 billion from the general fund to endowments and expendable trusts, according to the LFC.

"All of that money is being invested," Sharer said, "and we're going to live off of the interest of that, or at least use the interest off that to stabilize those funds."

General fund reserves sit at 32% of recurring appropriations, according to the LFC.

Sharer said it's huge that the capital outlay is in cash and not bonding, eliminating interest for the state. Legislative finance experts warned lawmakers before the session that New Mexico's bond ratings are in the bottom 20 percent nationally.

Not all lawmakers agreed with setting aside so much money for the future.

During floor debate, Sen. William Soules, D-Las Cruces, asked if lawmakers are so afraid for the future that they're putting aside dollars for then and not today. He questioned how many children in New Mexico are in unsafe and unhealthy positions, and how many state agencies — such as the Supreme Court and the New Mexico Public Regulation Commission — are underfunded.

"We have billions in savings and investments. But we have needs now," he said.

Sen. Gerald Ortiz y Pino, D-Albuquerque, reiterated some of Soules' complaints and said there may be fewer future needs if lawmakers invest more dollars today rather than saving so much. He said more investment in housing is needed as well as into the CYFD or early childhood education.

Sen. Michael Padilla, D-Albuquerque, said the state is fully funded to keep going the free breakfast and lunch program the Legislature passed last year . He said he remembers when lawmakers had to take money away from school districts that were doing well in the past because of budget limitations. He said he hopes lawmakers won't have to ever do that again.

"It's going to create an absorption whenever we have a down year," he said. "It's something that's manageable so our people don't always feel it and we have a way to overcome that."

Tallman said more discussion is needed on how the state can become more independent from oil and gas revenues.

"I really don't know what we're going to be doing to diversify our economy, which is one of the most important issues we should be dealing with at the moment," he said.

Sen. William Burt, R-Alamogordo, agreed that booming oil and gas revenue won't always be available to the state.

He said lawmakers need to look at some of the less exciting factors of the budget, like retirement, to preserve the long-term future of New Mexico.

He said there's a lot of moving parts that go into the budget.

"We'll never be able to cover everybody's bases completely," he said. "We do absolutely the best we possibly can."

Public safety

State police officers would get a raise under the spending plan, becoming the highest-paid law enforcement agency in the state. Exact raises for individuals vary depending on their experience and position. The Senate Finance Committee amended the budget to include $25 million for recruitment of local law enforcement and correctional agencies.

"They should be the highest paid law enforcement officials in the state," Padilla said. "It should be that you work up to and reach that level of your career."

Senators also argued financial boosts for transportation to address public safety issues.

Muñoz told the Journal one of the biggest changes from the House budget to the Senate Finance's amended budget are the dollars for transportation projects, like the $700 million for local and collector streets.

Burt said lawmakers are putting a "big dent" in issues the Department of Transportation says it needs to overcome, including nearly $11 billion for infrastructure repairs.

Muñoz said he's proud of the work New Mexico is doing, pointing to the hardships the state faced during the pandemic and in economic downturns before then.

"Hold your head up high," he said. "You may not like everything that's happening here, but New Mexico, you are not a poor state."

Staff Writer Gregory R.C. Hasman contributed to this report.