Democrat

State lawmakers unveiled a record-high $10.8 billion spending plan for fiscal year 2026, a budget that includes higher starting salaries for teachers, an average 4% pay increase for state employees, and over $3 billion in one-time expenditures. This marks a 5.7% increase over the current year’s budget. However, a closer examination reveals concerns about the long-term implications of this level of government spending, as highlighted by the Rio Grande Foundation’s analysis.

“New Mexico is in the best financial situation it’s ever been in its history,” said Sen. George Muñoz (D-Gallup), chair of the Legislative Finance Committee (LFC), during a press briefing. Muñoz emphasized that the budget aims to invest in priorities such as education, healthcare, and job opportunities for future generations. Yet, critics argue that such spending perpetuates an unsustainable trajectory.

The budget’s $10.8 billion in recurring spending is slightly below Democrat Governor Michelle Lujan Grisham’s $10.9 billion proposal. Additionally, while the LFC’s recommendation calls for a 4% raise for state employees, the governor’s plan includes a smaller 3% increase. Differences also exist in reserve levels, with the LFC maintaining reserves at 33% compared to the governor’s 34.2%.

The Rio Grande Foundation raised concerns about the broader implications of the spending spree. With $900 million in new revenue and $13.4 billion in general fund revenue available, the Foundation criticized the lack of focus on returning surplus funds to taxpayers. “Whether the money is spent now or allocated to one of our State’s permanent funds, it is going to be spent by government,” the Foundation noted. The question, they argue, is whether average New Mexicans and businesses will benefit from this surplus.

Despite the enthusiastic rhetoric from lawmakers, the Foundation’s analysis highlights that this budget reflects a growing government at the expense of direct relief to taxpayers. “The Democrats have grown government and mostly NOT shared the wealth with average New Mexicans,” the Foundation’s critique states, pointing to recent electoral success as a driver for this trend. They caution that taxpayers may once again be “left out in the cold,” especially with no tax cuts included in the bill.

Democrat House Speaker Javier Martínez lauded the budget’s focus on affordability, safety, and healthcare access, calling it “a guide and driving force of the entire session.” Similarly, Senate Majority Leader Peter Wirth described the spending plan as an “extraordinary opportunity” for investment. However, the Rio Grande Foundation’s perspective suggests a need for restraint and an emphasis on fiscal responsibility.

The proposed $3 billion in one-time spending includes $1.7 billion for endowments and funds, as well as new initiatives such as a “behavioral health trust fund.” While these initiatives aim to address immediate and long-term needs, critics argue they sideline opportunities for direct tax relief. “Taxpayers should have a say in how surplus funds are utilized,” the Rio Grande Foundation posits, urging lawmakers to prioritize returning money to the people who generate it.

As New Mexico’s financial position remains strong, questions about how to balance investment in public services with taxpayer relief will shape the upcoming legislative session. With a budget described by some as a “responsible investment” and by others as a “missed opportunity,” the debate over spending priorities continues.