(Santa Fe, NM) – The New Mexico State Senate today passed (24-16) a balanced and forward-looking state budget for Fiscal Year 2026, representing a key step in maintaining the state’s fiscal health and ensuring future economic stability. The Senate Finance Committee’s amendment to the House Appropriations and Finance Committee Substitute for House Bill 2 (the General Appropriation Act) sets a state budget of $10.8 billion. This budget reflects a responsible, sustainable growth trajectory of 6%, which is aligned with the state’s projected revenue growth.
“New Mexico is not a poor state. Today, we are a land of opportunity,” said Senate Finance Committee Chair George Muñoz (D – Gallup). “We can withstand a recession. And this budget provides the greatest chance New Mexico has ever had to diversify its economy. It opens doors for children to receive an education from pre-K to college. It ensures seniors have access to healthy food when they need it. It creates opportunities for capital outlay and other investments to help every community thrive.”
With a strategic focus on fiscal prudence, the committee has preserved the state’s financial stability with a 30% reserve target. The budget includes reserves totaling $3.25 billion to ensure New Mexico can weather any potential economic downturn and continue to fund essential services and investments in the state’s future.
“This budget will have immediate benefits to New Mexicans while positioning us for sustainable long-term growth and ensuring we have safeguards to deal with any fiscal uncertainties,” said Senate Finance Committee Vice Chair Senator Benny Shendo Jr. (D-Jemez Pueblo)). “The budget passed today clearly reflects our shared commitment to addressing the needs of every New Mexican. I’m particularly proud of the increased funding we made toward education, because there is no better investment we can make in this state than to the health and education of our kids.”
Key Highlights of Senate Amendments to HB 2
Recurring Investments:
- Education Investments: The Senate Finance Committee’s budget makes substantial investments in education, especially in secondary education. By fully adopting reforms to the state’s equalization guarantee formula, the committee has allocated an additional $76 million above the House’s proposal. These funds will support an expansion of the unit value for secondary education from 6th through 12th grade, enabling New Mexico’s schools to improve career technical education, enhance student support, and invest in innovative initiatives to boost graduation rates.
- Early Childhood Education: The committee has also prioritized early childhood education with significant increases in funding for childcare, early childhood reading programs, and tribal supports. In addition, the committee has safeguarded the base budget for childcare assistance, pre-kindergarten, and early childhood Medicaid, ensuring stability even during times of fiscal uncertainty.
- Children Youth and Family Department (CYFD): Building on previous appropriations, the Senate Finance Committee has added $27.8 million over the next two years to meet the requirements of the Kevin S. remedial order and to fulfill mandates currently going through the legislature. This funding, drawn from the Government Results and Opportunity Fund, comes with much-needed accountability and transparency.
- State Employee Compensation: The budget includes a 4% salary increase for all state employees, educators, and higher education staff, recognizing their essential role in serving New Mexicans. It also expands the state’s employee health insurance benefits, with the state covering 80% of premiums and up to 100% for lower-income employees and National Guard members.
Non-Recurring Investments:
- Behavioral Health and Housing: In a bold move to address the state’s behavioral health needs, the Senate Finance Committee has allocated an additional $61.5 million to fully fund the behavioral health package in Senate Bill 2, bringing the total investment in behavioral health and housing to $280 million. The committee also made a $100 million initial down payment into the Behavioral Health Trust Fund to sustain long-term support for these critical services.
- Community Infrastructure and Development: SFC added a $25 million investment in the Rural Health Care Delivery Fund, promoting healthcare expansion in rural areas. Additionally, $65 million has been added for road maintenance, while $12 million has been added for rural air service statewide. Investments in energy and infrastructure, including grid modernization, EV school buses, and economic development, will support New Mexico’s growing communities. SFC also provided an initial infusion of $50 million for the natural disaster revolving loan fund to help our communities recover from fires and floods.
- Public Safety: The Senate Finance Committee’s budget also invests in public safety, adding funding for a statewide case management system for district attorneys, recruitment and retention efforts for public defenders, and additional resources for the Attorney General’s office for training and legal expenses.
“We’ve done the right thing for New Mexicans in this budget,” continued Senator Muñoz. “We’ve invested in economic development, in education, in quality of life – these are what will keep people here, bring people here, and help everyone prosper.”
The Senate Finance Committee’s budget for Fiscal Year 2026 reflects a commitment to sustainable growth, economic resilience, and investment in New Mexico’s future. By maintaining a balanced approach to fiscal responsibility and strategic investments across education, health, public safety, and infrastructure, the committee has created a budget that will support New Mexico’s continued success for years to come.
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