New Mexico Governor Proposes Ambitious $11.3 Billion Budget Plan for 2026

Overview of the Budget Proposal

Governor Michelle Lujan Grisham has introduced a significant $11.3 billion budget proposal for the fiscal year 2026, aimed at addressing key priorities including public sector pay raises and universal child care funding. This plan represents a $503 million increase in state spending, marking a 4.6% rise from the previous year despite projected revenue declines due to falling oil prices and lower corporate tax collections.

Key Features of the Budget

Universal Child Care Funding

A standout feature of the budget is the allocation of an additional $160 million for universal child care, which seeks to eliminate income restrictions on state-subsidized services. This initiative builds on a funding increase from $150 million in 2022 to a total of $606.4 million aimed at maintaining free child care for all families in New Mexico. The governor’s office emphasizes that this funding will improve child outcomes and enhance economic opportunities across the state.

However, the plan has faced scrutiny from legislators, particularly regarding its financial feasibility. Senator George Muñoz, chair of the Senate Finance Committee, expressed concerns about the costs associated with the initiative, suggesting that the state may need to consider utilizing a $10.9 billion trust fund to support it. For further insight, you can read more here.

Employee and Teacher Salary Increases

The proposed budget also includes a $62.7 million allocation for a 1% salary increase for all state employees and teachers. Additionally, law enforcement officers, wildfire crews, and emergency responders could receive a larger 6% salary boost, totaling $13.5 million. These raises follow a substantial increase in average salaries for state workers and teachers over the past six years, reflecting the administration’s commitment to adequately compensate public sector employees.

Infrastructure and One-Time Investments

The budget outlines one-time expenditures that include:

• $100 million for road projects.
• $238 million for various water projects aimed at securing the state’s water supply.
• Up to $200 million for renovating the State Fairgrounds in Albuquerque.

These investments are designed to address infrastructure needs that have become increasingly critical as the state navigates its fiscal landscape. The governor’s plan aims to ensure that these projects are funded while maintaining caution against overspending.

Legislative Considerations and Future Outlook

The proposed budget will be reviewed during the upcoming 30-day legislative session starting January 20, 2026. While many lawmakers agree with the governor’s priorities, there is a shared concern about potential overspending given the current economic climate. Representative Nathan Small noted the importance of careful budgeting in light of uncertainties surrounding federal funding, particularly regarding Medicaid, which could affect up to 100,000 New Mexico residents.

Governor Lujan Grisham’s budget proposal emphasizes a disciplined approach to state finances while addressing the needs of families and communities across New Mexico. As the state prepares for its next fiscal challenges, the focus will remain on balancing growth with fiscal responsibility.