Dec. 12 -- Gov. Michelle Lujan Grisham on Thursday released her version of the state's fiscal year 2026 budget, proposing a 7% increase in recurring general fund appropriations plus an additional $2.3 billion in one-time spending.
Though the final version of the budget will be hammered out during the upcoming legislative session -- slated to begin on Jan. 21 -- Lujan Grisham's recommendation, which includes $10.9 billion in recurring general fund spending, sets clear expectations in how the executive branch expects the state to spend its money, with major increases flowing toward infrastructure, health care and services for children and families.
"My Executive Budget Recommendation builds on the success we've achieved while boldly investing in innovative solutions that support our children, strengthen families, enhance schools, back our local business, and uplift communities," Lujan Grisham wrote in a letter introducing the recommendation.
Initial signs from lawmakers, however, indicate neither Lujan Grisham nor the agencies she oversees are likely to get all of their budgetary wishes granted.
Sen. George Muñoz, a Gallup Democrat and chair of the Legislative Finance Committee, has repeatedly urged prudence in spending the state's money -- including as state agencies went before the committee this week, some of them asking for sizable budget increases.
"We must balance diversifying the economy with educating children, building roads with addressing critical behavioral health care needs, patrolling highways with securing our state's water future," Muñoz wrote in the committee's November newsletter. "We are tasked with making these hard decisions all while ensuring we deliver a balanced budget."
Senate Minority Floor Leader Bill Sharer criticized the governor's proposed 7% increase in recurring spending.
"It is obviously too much," Sharer, R-Farmington, said in an interview Thursday. "After huge growth for three years in a row, another 7% is just unfathomable and unsustainable."
Sharer said one-time appropriations for things like infrastructure improvements would be more prudent for now, as the state waits for its oil and gas revenue boom to turn into a bust.
Given the state's bright fiscal forecast, however, Wayne Propst, Cabinet Secretary for the Department of Finance and Administration, said the 7% increase in spending is "sustainable."
The governor released her budget recommendations -- which typically come shortly before the start of the legislative session in January -- unusually early this year. Propst said this will give the public and lawmakers time to digest the specifics of her more than 200 pages of recommendations.
"There's no reason to wait until the week before the session because that doesn't give the public time -- in fact, it doesn't give the Legislature time -- to really analyze what the executive is proposing," he said.
Infrastructure, water, health care among priorities
So, what is the governor hoping for in fiscal year 2026?
Infrastructure investment is among her major funding priorities. Her recommendation includes $300 million for road construction and maintenance, plus $70 million to support satellite internet connectivity.
She's also looking to implement the 50-year Water Action Plan she announced earlier this year. Her budget request includes $75 million for the Strategic Water Supply, which would treat brackish water and oil and gas byproducts for industrial uses, plus tens of millions more for rural water infrastructure, aquifer monitoring and groundwater cleanup efforts.
Education would remain by far the single largest piece of the budgetary pie, with $4.6 billion -- a 3% increase -- heading to the Public Education Department and $1.4 billion to the Higher Education Department.
The governor wants to continue to focus on child welfare and early learning, proposing another $45.2 million to expand pre-K slots and $98 million for child care assistance, as well as a nearly 10% boost in the budget for the still-struggling Children, Youth and Families Department.
Lujan Grisham also recommended additional funding for New Mexico's health care system, proposing an almost 11% increase in the Health Care Authority's budget -- the biggest increase for any state agency. Big-ticket spending priorities include $50 million to support rural health care providers and facilities and $100 million for behavioral health services expansion.
And finally, the governor recommended some funding for her public safety agenda -- the subject of a lackluster special session in July during which lawmakers from Lujan Grisham's own party largely rebuffed her proposals -- including an additional $4.5 million for the state's Organized Crime Commission and $45 million for Hepatitis C and opioid use treatment in prisons.
But most of the movement on public safety will come from statutory changes -- and Lujan Grisham is planning to present a "robust package of bills" to make those changes, said Daniel Schlegel, the governor's chief of staff.
The governor's staff on Thursday declined to share specifics about whether New Mexico residents can expect any changes in taxes.
Schlegel said discussing those changes would be "premature," though he added, "there is some appetite out there for some tax changes."