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On Friday, top legislators in New Mexico proposed a 5.9% rise in general fund expenditure for the upcoming fiscal year due to a surplus in revenue from oil, but also expressed concerns about the longevity of the state’s oil profits and allocated more funds for savings and investments.
The Democratic-led Legislature has received a proposal from a leading budget writing committee to increase general fund spending by $566 million for the fiscal year of July 2024 to June 2025. This would bring the total general fund spending to $10.1 billion. The proposed increase is a small portion of the expected $3.5 billion surplus in state income after fulfilling current tax responsibilities.
The proposed budget aims to enhance academic success in public schools, strengthen healthcare for individuals in poverty or on the brink, as federal aid for Medicaid decreases due to the pandemic. It also includes salary increases of approximately 4% for state workers and raises in compensation for those working in public schools and colleges.
The promotion of children’s welfare is highly emphasized, with a suggestion to raise funds from a trust for early childhood education in order to broaden prekindergarten programs and provide home visits from nurses for parents of young children. The early childhood education trust was created in 2020 during a large increase in oil revenue and currently holds approximately $6 billion.
State Senator George Muñoz from Gallup cautioned that the state’s budget is increasingly dependent on revenue from the oil and natural gas industry, which is susceptible to unpredictable fluctuations in both pricing and production levels.
“I believe this situation is highly precarious,” stated Muñoz, head of two key committees responsible for budget drafting. “In my opinion, this budget is very well-structured… It maintains New Mexico’s ability to thrive in the coming years without the need for significant cuts in the future.”
On January 16, the legislative body will come together for a short, 30-day session focused on discussing the budget. Governor Michelle Lujan Grisham has the power to reject any budget decisions made by lawmakers.
Senator Pat Woods, a Republican from Grady, has stated that he is encouraging his fellow colleagues in the Democratic majority to approach recent budget increases with reason and caution.
Senator Woods, one of fourteen Republican senators in a chamber dominated by Democrats, questioned the effectiveness of our current funding and suggested considering a temporary pause on major expenditures in order to assess its impact.
According to the legislators’ proposal, there would be a $243 million increase in spending for public schools, amounting to a 5.8% rise to a total of $4.42 billion.
The proposal would also greatly raise funds for the state’s court system, as well as for local prosecutors and public defenders, in response to increased worries about crime and gun-related violence in Albuquerque.
Representative Derrick Lente from Sandia Pueblo expressed that the budget proposal allows for $200 million in tax cuts and incentives.
Last year, Lujan Grisham utilized her veto authority to reduce a tax relief plan due to worries that it could have a negative impact on funding for public education, healthcare, and law enforcement in the future. The vetoed items consisted of lower tax rates for personal income, sales, and business transactions. Additionally, credits for buying electric vehicles and charging equipment were also vetoed, but are now being reconsidered in negotiations this year.
The chairman of the lead House committee on taxation, Lente, stated that they are adopting a more cautious strategy for their tax proposal this year.
A competing budget proposition by Lujan Grisham aims to boost general fund expenditures by approximately $950 million, a nearly 10% increase, reaching a total of $10.5 billion. The proposal includes significant efforts to support homeownership and create more affordable housing opportunities.
The two financial plans indicate that there will likely be an end to three consecutive years of large amounts of state funds being given to households in New Mexico. In the most recent year, over $600 million was distributed to individuals in payments of $500.
Source: independent.co.uk
