New Mexico governor pitches tax relief, more classroom time

January 10, 2023 GMT
Gov. Michelle Lujan Grisham gives her inaugural address during a public ceremony at the Lensic Performing Arts Center in Santa Fe, N.M., Sunday, Jan. 1, 2023. (Eddie Moore/The Albuquerque Journal via AP)
Gov. Michelle Lujan Grisham gives her inaugural address during a public ceremony at the Lensic Performing Arts Center in Santa Fe, N.M., Sunday, Jan. 1, 2023. (Eddie Moore/The Albuquerque Journal via AP)

SANTA FE, N.M. (AP) — New Mexico would use a surge in oil-related income to underwrite health insurance costs for educators, expand minimum classroom instructional hours at public schools and shore up access to health care and high-speed internet in remote areas, under budget recommendations issued Tuesday by Gov. Michelle Lujan Grisham.

The budget proposal from the newly reelected Democratic governor would increase annual state general fund spending by nearly 12%, to $9.4 billion, for the fiscal year starting July 1 and ending in June 2024.

The Democratic-led Legislature convenes next week to negotiate a state budget during a 60-day session. Leading legislators are scheduled to publish spending priorities later this week.

The state government expects there to be a multibillion-dollar financial windfall in the current and upcoming fiscal years, largely from surging oil production and high energy prices. Voters in November also approved increased annual withdrawals from a multibillion-dollar state trust to pay for early childhood education initiatives and K-12 public schools.

Lujan Grisham is proposing $1 billion in tax rebates that could provide direct payments of as much as $1,500 per household, along with $500 million in tax relief, in part through cuts in some income tax rates and lower statewide gross receipts taxes on sales and services.

Her budget proposal would devote $100 million to pay the individual cost of health insurance for educators throughout the state, though not their dependent family members.

The state already is investing heavily in early childhood education programs and teacher compensation in an effort to improve a public education system that ranks at the bottom of many lists for academic achievement. Results from the latest standardized tests also show just 26% of students in grades three through eight were proficient in math, while only 34% were proficient in reading.

Under the proposed budget, core state spending on public education would be tied to an expansion of minimum annual instructional hours at public schools — marking a new approach. In recent years, many school districts have turned down optional funding to lengthen school hours, the school year or both.

Lujan Grisham is recommending salary increases of 4% for both public school and state employees.

The governor also wants to devote more spending to housing initiatives and solutions to homelessness; police recruitment and retention; at-home visits and counseling to improve early childhood wellbeing; an expansion of rural health care facilities; and to establish public endowments for graduate medical school programs.

The budget recommendation “empowers the state to continue to take on new and innovative strategies that are disrupting the status quo, that help our children, our families, our schools, our small businesses and our entire economy,” Lujan Grisham said in a statement.

Economists expect the state government’s income for the upcoming fiscal year to be nearly $12 billion. That revenue would exceed current annual general fund spending obligations by $3.6 billion, or 43%.

Lujan Grisham’s budget recommendations include $10.2 million set-aside for construction of a reproductive health care clinic in southern New Mexico that would offer abortion services.

Across the nation, many states have built historic cash surpluses with help from federal pandemic aid allocations and increased revenue on recent sales and income tax collections. Those surpluses may soon be tapped to cover tax cuts and greater spending on priorities such as infrastructure and education.

Though most states can afford it, financial experts are nonetheless urging caution because of concerns the U.S. could slip into a recession.