SANTA FE, N.M. (AP) — Revisions to New Mexico's budget plan released Tuesday would set aside money for the governor's tuition-free college initiative and dial back average teacher raises to 4% instead of 5% as originally proposed.
The Senate's spending measure increases general fund spending by $536 million, or 7.6%, to $7.6 billion for the fiscal year that starts on July 1.
State economists are anticipating an annual windfall of roughly $800 million linked mainly to oil production.
The Democratic-led Legislature is backing the governor's proposal to set aside $320 million in an endowment to provide investment income for early childhood education and well-being programs in the future.
The Senate plan makes hundreds of revisions to a House-approved budget bill that outlined bigger raises for teachers but left out money for a hallmark proposal from Democratic Gov. Michelle Lujan Grisham to eventually provide tuition-free college to 55,000 students living in New Mexico.
The budget plan increases spending on college scholarships by $32 million. Some of that would be devoted to scholarships for students studying to be teachers as New Mexico struggles to fill more than 600 educator vacancies.
For the coming school year, college students pursuing certificates and associate degrees would be eligible for a tuition-free “opportunity scholarship." Lujan Grisham hopes to expand the program to four-year students for the 2021-2022 school year. Opportunity scholarships would be awarded before federal grants to help students cover living expenses and avoid racking up debt.
The Senate's version of the budget heads to a floor vote and then back to the House for consideration. A budget is due to the governor by Thursday. Lujan Grisham can veto any portion of the spending plan or the entire bill.
Senate finance committee chairman John Arthur Smith, a Democrat from Deming, warned that the budget plan increases spending obligations at three times the rate of inflation and puts the state on “thin ice” in the event of an economic downturn or oil sector bust.
Republican Sen. Gay Kernan of Hobbs directed her comments at teachers and other school employees who might be disappointed by a 4% average salary increase, warning that larger raises might lead to layoffs later.
“We have to remember that oil and gas is very volatile,” she said.
At the same time, special education and bilingual education teachers would receive a 7% salary hike.
Most state employees would receive 4% raises, with a smaller bump for judges, prosecutors and corrections officers and a higher increase for state police officers and motor vehicle division clerks.
In the Senate's budget, spending on K-12 education would increase by $216 million, or 6.7%, to nearly $3.5 billion. Public schools rely almost entirely on state funding and endowments.
Lawmakers also kept investing heavily in extending the school calendar, adding nearly $9 million to the annual base spending of $119 million for five extra weeks of K-5 classes and $71 million for 10 additional classroom days across all grade levels. Teachers that opt into those programs can boost their income by more than 20%.
Spending on health and safety net programs would increase by 7% to nearly $1.2 billion, amid a push to increase Medicaid enrollment. The federal government is expected to pay about $4.7 billion toward the state Human Services Department's programs.
Democratic Sen. George Munoz worried aloud that accelerating deficit spending by the federal government will eventually come due and undermine New Mexico's public finances.
The Senate budget proposal would put $1.9 billion into reserves that could sustain spending if state income falters unexpectedly. That's the rough equivalent of 25% of annual general fund spending.