New Mexico Proposes Increased Spending Plan Focusing on Healthcare, Education, and Medicaid Funding Amid Trump’s Inauguration

Donald Trump

SANTA FE, N.M. (AP) — New Mexico legislators have proposed a 5.7% increase in general fund spending for the upcoming fiscal year, focusing on healthcare, public education improvements, and early childhood programs designed to support families’ finances.

The Democratic-led Legislature’s budget proposal suggests a $577 million increase, bringing the total budget to $10.8 billion for the fiscal year spanning July 2025 to June 2026. The state, which ranks as the nation’s second-largest oil producer, is experiencing a slowing but ongoing boost in revenue from petroleum production.

Senate Majority Leader Peter Wirth from Santa Fe highlighted that this spending plan leaves room for an additional proposal to create a $1 billion endowment, using investment earnings to expand mental health and addiction treatment services. This is a response to the increasing visibility of homeless encampments in cities across the state and concerns about public safety. Governor Michelle Lujan Grisham has made addressing crime and homelessness a key priority in the 60-day legislative session beginning next week.

House Speaker Javier Martínez of Albuquerque emphasized that the new budget proposal is aimed at making life more affordable for New Mexico families. “This budget is not just about making our communities safer, but also about increasing access to healthcare, including mental health and drug addiction treatment,” he stated.

One of the most notable aspects of the budget is the proposed $3.3 billion increase in healthcare funding, which would bring the total state and federal spending on Medicaid to $15.5 billion—an increase of 27%. This includes a new hospital assessment that will help bring in additional federal Medicaid funds for healthcare services in New Mexico.

State Senator George Muñoz of Gallup, a key budget negotiator, noted that New Mexico is financially prepared in case the federal government reduces Medicaid funding after President-elect Donald Trump takes office. “Medicaid is the number one issue across all states,” Muñoz said. “We’re ready to react if needed. We have the ability and funds to handle it.”

Education also plays a central role in the proposal, with K-12 public education spending set to increase by 6%, or $263 million, to $4.7 billion. The budget also allocates $150 million for pilot programs focused on improving literacy, math proficiency, and reducing absenteeism in elementary schools.

The state’s early childhood education trust—funded by revenue from oil production—is also set to grow by 9%, or $290 million, reaching a total of $854 million. This increase will be used to expand childcare services and related healthcare assistance.

Governor Lujan Grisham has proposed an even larger budget increase, with a 7% rise in general fund spending. While the Legislature develops its own spending proposal, the Governor holds veto power over any provision passed by lawmakers.

The proposed budget also includes a 4% pay increase for public employees across state government, public schools, and colleges. However, the current proposals do not mention tax cuts or incentives. Some Republicans in the state House have pushed for the elimination of personal income taxes for high earners, currently taxed at 5.9%.

Source: AP News

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