Big promises, bigger waste: Inside MLG’s extravagant NM budget ask

Democrat Gov. Michelle Lujan Grisham’s recently unveiled $10.9 billion budget proposal is being marketed as a major investment in New Mexico’s future, but a closer look reveals troubling trends of fiscal irresponsibility, misallocation of funds, and misplaced priorities. While the administration touts its commitment to issues like homelessness, child care, and infrastructure, critics argue that the governor’s reckless spending, fueled by oil and gas revenues she simultaneously seeks to undermine, is setting New Mexico up for long-term instability.

The proposed budget represents a $720 million, or 7%, increase in state spending compared to the current fiscal year. Since Lujan Grisham took office in 2019, recurring state spending has skyrocketed by a staggering 45%. Such ballooning expenditures would be unsustainable for most states, but New Mexico’s budget is propped up by record-breaking oil and gas production from the Permian Basin—a source of revenue that accounts for 35% of the state’s total income.

This irony is not lost on many critics. On one hand, Lujan Grisham’s administration has made a habit of demonizing the oil and gas industry, promoting aggressive “climate” policies and stricter regulations. On the other hand, the state’s financial health remains dependent on that very industry. It’s a double standard that has left many New Mexicans questioning the governor’s true intentions.

Despite this influx of oil-fueled billions, many believe the money isn’t being spent wisely. Instead of prioritizing savings or trust funds (such as the rainy day fund) that could support future generations, Lujan Grisham’s proposal calls for sweeping expenditures on initiatives that have yet to prove effective. For example, the $50 million allocation for rental assistance and homeless shelters is a drop in the bucket compared to the scope of New Mexico’s housing crisis, and similar expensive policies tried out in other states prove to be ineffective or even more harmful than the original crisis. Without structural reforms or measurable outcomes, such one-time cash infusions risk becoming wasteful handouts with no lasting impact.

State employees and public school workers are set to receive pay raises under the plan—3% for teachers and education workers and targeted raises for state employees. It’s unclear if these raises are being distributed in a manner that addresses critical staffing shortages or high-need areas.

The governor’s budget also calls for significant investments in “behavioral health” programs, including $100 million to expand mental health and substance abuse facilities. While no one doubts the importance of behavioral health, critics argue that much of this money could end up in bureaucratic limbo. Rep. Nathan Small, D-Las Cruces, who chairs the New Mexico House Appropriations Committee, insists lawmakers are making “very significant” investments in behavioral health, but without clear accountability measures, it’s hard to see how New Mexicans will directly benefit.

Another point of contention is the proposal’s handling of tax relief. Despite New Mexico’s multi-year revenue boom, the governor’s budget offers no specific calls for tax cuts or rebates. In contrast, Sen. George Muñoz, D-Gallup, a top budget official, has criticized past rebate checks as a “waste of money” and argues that excess funds should be funneled into trust funds to generate future investment returns. Muñoz’s perspective highlights a fundamental divide between short-term giveaways and long-term financial stewardship.

Meanwhile, the state’s public education system—already consuming 44% of the budget—would receive even more funding under Lujan Grisham’s plan. Despite a notable drop in statewide school enrollment, the governor proposes expanded funding for universal school meals, summer reading initiatives, and a $150 million investment in Native American education over three years. While improving educational outcomes is essential, critics argue that increased spending without addressing enrollment declines could lead to inefficiencies and wasted resources.

Supporters of the governor’s approach highlight the creation of trust funds as a silver lining. For instance, an early childhood trust fund established with a $300 million allocation in 2020 now boasts a projected $9.6 billion balance. But this success story is not replicated in all areas of the budget. In contrast, other trust fund contributions, such as $50 million for rural hospitals and $110 million for federal matching funds, come with less clarity on how they’ll be managed or evaluated.

The contradictions in Lujan Grisham’s fiscal strategy are hard to ignore. She’s banking on oil and gas revenues to support a spending spree while simultaneously pushing policies to limit that very industry’s future in New Mexico. Instead of ensuring that excess funds are saved or invested wisely, the governor’s plan leans heavily on headline-grabbing initiatives that may have little long-term impact.

New Mexico House Republicans noted, “All the creative accounting in the world can’t hide the BILLIONS of your tax dollars just sitting in the hands of Santa Fe politicians.” 

With the 60-day legislative session set to begin on Jan. 21, lawmakers will have their chance to amend or reject portions of this bloated budget. As debate heats up, New Mexicans deserve answers on how their oil- and gas-derived tax dollars are being spent—and how much of that money is being squandered on initiatives that lack accountability, oversight, and lasting value.