State budget takes center stage, advancing to full House

A House committee on Monday advanced a $7.6 billion budget plan for next fiscal year, giving Gov. Michelle Lujan Grisham much of the education funding she had asked for yet choosing not to back her marquee free-tuition plan. The House Appropriations and Finance Committee approved House Bill 2 with an increase of $529 million, or […]

State budget takes center stage, advancing to full House

A House committee on Monday advanced a $7.6 billion budget plan for next fiscal year, giving Gov. Michelle Lujan Grisham much of the education funding she had asked for yet choosing not to back her marquee free-tuition plan.

The House Appropriations and Finance Committee approved House Bill 2 with an increase of $529 million, or 7.5 percent, from the current year’s budget. The bill passed by a vote of 11-5 along party lines, with Republicans decrying the spending level as too high. The bill is expected to be taken up by the full House later this week. 

The House panel found a middle ground between the fiscal year 2021 spending plan proposed by Lujan Grisham and that recommended by a key legislative panel. The governor had called for a $7.68 billion spending plan, while the the Legislative Finance Committee recommended $7.55 billion. 

“It’s been a very good working relationship,” said Rep. Patricia Lundstrom, chairwoman of the committee, speaking of the Governor’s Office. “Obviously they didn’t get everything they thought they were going to get.”

The budget proposed in the bill is $65 million higher than the Legislative Finance Committee’s proposal, with early childhood and K-12 education accounting for the bulk of the difference. The newly created Early Childhood Education and Care Department would receive $16 million more in general fund money than contemplated in the committee’s recommendation.

Notably, HB 2 did not include $35 million in recurring funds for Lujan Grisham’s proposal that essentially would provide free tuition for all New Mexicans — covering remaining costs for each qualifying student after the state’s lottery scholarship and federal Pell Grant are applied.

“We did not put anything in there for the Opportunity Scholarship,” said Lundstrom, D-Gallup. 

Instead, the legislation includes around $35 million in mostly one-time allocations for existing higher education financial aid programs, such as the Legislative Lottery Scholarship and the Student Incentive Grant, which is similar to a proposal made by the Legislative Finance Committee.

The lottery scholarship in the past has covered full tuition for eligible in-state students attending New Mexico colleges and universities. In the last several years, however, demand has far outpaced the available funds from lottery ticket sales. The scholarship now covers only a portion of a student’s tuition, prompting lawmakers to make repeated efforts in past sessions to shore up the program.

Lujan Grisham’s office said it would “continue to push” for its much-publicized New Mexico Opportunity Scholarship. 

“We are optimistic this game-changing benefit for students and returning-adult learners all across the state will be provided for,” said Nora Meyers Sackett, a spokeswoman for the Governor’s Office.

The Senate Finance Committee can modify the budget bill when it takes up measure, which will happen after the full House approves it. 

Republican legislators on the panel were critical of the spending legislation. They said the possibility of a recession was not built into the bill and voiced concern the state could potentially have to cut programs, as it did in 2016, if there’s a downturn in the economy or a drop in oil prices.

“Whenever I look at the final result and see we’ve increased spending 20 percent in two years, I worry about how sustainable it is,” Rep. Jack Chatfield, R-Mosquero, said at the hearing. “I think it’s a bill filled with a lot of good things but I don’t know if we can afford it.”

Lundstrom later called the GOP criticism “a red herring” and “disingenuous.” Republican legislators had participated in work groups that constructed the budget proposal, she said, adding she believed their comments came from a “marching order” from Republican leadership.

“When you see the kind of reserve numbers we have versus the need that was presented, it’s clear we need to fulfill the citizen need,” she said.

The bill proposes a budget reserve level of 26 percent.

The Governor’s Office also said it believed still more funding was needed for early childhood education.

“There is still a ways to go before the budget is finalized and we’re going to keep working to make sure we get where we need to be,” Sackett said.

The bill calls for a 5 percent salary increase for teachers, a 4 percent increase for other educational workers and 3 percent for state employees, Lundstrom said.

In response, the Governor’s Office said teacher raises were “long-overdue and absolutely essential” but had to remain “sustainable.”

The legislation sets aside around $76 million as part of an effort, proposed in Senate Bill 72, to put the Public Employees Retirement Association pension system on a path to solvency.

The bill sets aside $300 million for an early childhood trust fund backed by Lujan Grisham. Senate Bill 3, the legislation proposing to create that fund, was passed Monday by the Senate Finance Committee.

The legislation also would allocate $250 million to the Department of Transportation for spending on roads as well as $50 million for the local road fund.

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