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Who's going to benefit most from the latest version of New Mexico's proposed budget of nearly $10.8 billon?
A strong argument could be made for the state's middle and high schoolers.
The Senate Finance Committee on Tuesday voted 9-2 to approve its version of House Bill 2, the state's budget bill. The proposal would impose a maintainable 6% increase over fiscal year 2025, providing an extra $76 million for middle and high schoolers in the state's per-pupil funding formula, plus raises for teachers and other public employees.
The Senate Finance Committee's draft isn't the final version of the state's fiscal year 2026 budget. The proposal will still need approval on the Senate floor and concurrence from the House. Then, it'll be subject to line-item vetoes from Gov. Michelle Lujan Grisham.
The committee's proposal secured bipartisan support. Sen. Craig Brandt, R-Rio Rancho, noted he's only voted for one budget in his 13 years in the Legislature,\\ and he voted Monday to support the committee's version.
"It's actually a pretty, pretty big thing if I'm considering voting for a budget," Brandt said.
Much of the legislative session — especially New Mexico's budgeting process — has been clouded by anxieties around the possibility of federal funding cuts. In particular, state officials worry about cuts to Medicaid, which could pose particular problems for New Mexico given that its annual Medicaid spending outpaces the state's entire general fund.
But committee chair Sen. George Muñoz, D-Gallup, said the state can't adjust to potential changes to the federal budget when it's still a moving target. He likened this year's budgetary process to playing 52-card pickup.
"Which card should you move to the next place to figure out that? We can't figure that out now. We don't know what it's going to look like," Muñoz said.
He added, "We don't know … what's going to happen in Washington, and we can't be reactive to what they're doing. We have to be reactive to what we're doing here today in the state of New Mexico."
A budget, in brief
The Senate Finance Committee's total general fund price for fiscal year 2026: $10,795,269,200.
"There's no change because it's in the couch in my office," Muñoz joked during the meeting.
Each year, the state's budget bill starts in the House, moves to the Senate and returns to the House for final concurrence before making its way to the governor.
With only a few days remaining in the legislative session, the bill is expected to move to the Senate floor very soon.
One major change in the Senate Finance Committee's version: Their budget proposes taking $500 million from the state's Early Childhood Trust Fund to start feeding the state's behavioral health initiatives and Medicaid system, Muñoz said in an interview.
Several committee members voiced worries about federal funding changes, spurred by proposed tax breaks and spending cuts in Congress. Preliminary estimates indicated New Mexico could see a loss of more than $1 billion in federal funds for Medicaid alone.
Still, it's too early for the state to start formally planning for it, Legislative Finance Committee Director Charles Sallee told the committee.
Keeping an eye on the changing federal landscape will the "first order of business" for LFC's interim work.
The state is also likely to see a special legislative session later this year to address the shifting of federal dollars, Lujan Grisham has said.
Education dollars
Another major differences between the House's and the Senate's budget proposals: The Senate's version provides a more than $76 million bump in public school spending, intended to better support students in sixth through 12th grade.
"That's a big change for education," Muñoz said in an interview.
Public education spending makes up the single largest piece of the state's general fund budgetary pie. In fiscal year 2026, total public school support will top $5 billion, per the Senate Finance Committee's version of the budget.
This year, lawmakers have proposed a major overhaul of the state's education spending formula. House Bill 63, the result of two years of inquiry by the Legislative Education Study Committee, would make some changes to how the state divvies that money by student.
In addition to offering up targeted funds for English learners and altering the state’s method for identifying students in poverty, the original version of the bill also provided extra money for educating sixth through 12th graders — a component that didn't make it into the House's budget. The Senate Finance Committee added that money back into the bill.
The budget also incorporates 4% raises for public employees and planned $5,000 increases to teacher base pay at all experience levels.
Those are welcome changes, said Stan Rounds, executive director of the New Mexico Coalition of Educational Leaders.
The latest version of the state budget provides increased funding for secondary school students without imposing too many specifics on how that money is spent, a change Rounds said would allow schools and districts to use the money to best meet their needs.
"There are 89 different districts, about 100 charters that all have a different story and a different place of where they are with their students and with their communities," Rounds said.
He added, "This, I think, provides an opportunity for communities with their [school] boards to step up and do the highest priority work that they have."
Now, the question is: Will those extra dollars improve New Mexico's perennially challenged education system?
Muñoz said he's hopeful the increased spending on middle and high school students — aimed at enhancing hands-on education options — will yield the intended results.
"We're trying to get teachers more connected with those kids in that age group and in those grades," Muñoz said. "Hopefully, that'll keep them connected in class — because the number one thing we heard a lot of was a kid, at that age, wants to be connected."
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