- Associated Press - Thursday, April 4, 2019

SANTA FE, N.M. (AP) - Democratic New Mexico Gov. Michelle Lujan Grisham has authorized a nearly 12% increase in general fund spending for the coming fiscal year that includes across-the-board pay increases for teachers and state workers.

The governor on Thursday signed a $7 billion budget for the fiscal year that starts July 1 without major adjustments to the spending plan from the Democratic Legislature.

Spending on public schools alone will increase by $446 million to $3.2 billion. Substantial funding increases also are slated on economic development incentives and for child protective services, with enough money to fund 26 new positions.

“The governor is pretty adamant about getting that money out the door. We are streamlining the process,” said Finance and Administration Secretary Olivia Padilla-Jackson.

Record-breaking oil and natural gas production in southeast New Mexico has produced a windfall in state income. State economists have warned that budget surpluses could quickly reverse course with fluctuations in global energy markets.



To safeguard against a sudden recession, the bill signed Thursday sets aside reserves equal to 20% of annual spending obligations.

Lujan Grisham recommended a 25% buffer, but state finance officials call 20% enough to sustain spending for at least a year amid a major economic downturn.

Lujan Grisham also signed a tax reform bill aimed at developing new, more stable sources of state revenue - though it was not immediately clear if she approved every provision. The bill as written by the Legislature would increase state income by about $74 million from taxes on nonprofit hospitals, greater vehicle sales taxes and the opportunity for a higher personal income tax rate on top earners.

State workers will receive 4% pay increases come July 1, with a 5% increase for about 700 workers who currently make less than $25,000 annually.

A 6% raise was authorized for all public school staff. Some teachers stand to gain even more as minimum pay grades rise to $41,000 for new educators, and to $50,000 and $60,000 for higher certification levels.

The state also set aside more than $100 million to extend the school calendar by five weeks for as many as 90,000 elementary school students. Participating teachers would earn an additional five weeks’ pay - a roughly 15 percent salary bump.

New spending of $113 million is directed toward schools with a large share of at-risk students from low-income families.

The governor may not have the last word on public education spending.

A state district judge plans the review the budget for compliance with a court order to increase public school resources, especially to help poor and minority students from homes where a language other than English is spoken.

State spending on Medicaid will increase by $52 million over the prior year as federal subsidies step down to 90% for moderately low-income patients, covered under the state’s 2014 expansion of the program.

New Mexico and federal authorities will spend just over $6 billion on Medicaid for local residents in the coming fiscal year.

Lujan Grisham also was poised to approve nearly $1 billion in direct state spending on infrastructure projects, without borrowing costs or associated delays.

Line-item vetoes from the general fund spending bill represented $42 million - a tiny fraction of proposed spending. Proposed spending of $40 million was canceled because a corresponding bill for public-private infrastructure partnerships failed to pass.

The state Department of Transportation would see its largest budget in 15 years, according to the governor’s office. One-time agency funding includes $250 million for major roadway projects, and $89 million for smaller projects sprinkled across the state.

Lujan Grisham has the authority to veto all or portions of the budget and tax reform bills.

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