Executive proposal maintains 30% reserves as governor enters final year

Organ Mountain News report

SANTA FE - Gov. Michelle Lujan Grisham on Monday released her fiscal year 2027 executive budget recommendation, proposing $11.3 billion in spending as state officials prepare for possible federal funding reductions under the Trump administration.

The plan includes $11.33 billion in recurring spending, a 4.6% increase over the current fiscal year, while keeping state reserves at 30%, or about $3.4 billion.

The proposal is the final executive budget Lujan Grisham will deliver before leaving office.

Child care and early childhood programs

The budget recommends $606.4 million to sustain New Mexico’s universal child care program, which provides no-cost care regardless of household income. The proposal also includes $7.5 million to expand early prekindergarten enrollment by 500 children and $4 million for statewide home visiting programs.

K-12 education

The proposal continues a long-running expansion of public education funding under the governor’s administration. Since 2019, recurring K-12 spending has increased by 34.7%, and teacher pay has risen by more than 38%, according to the Governor’s Office.

New funding in the FY27 proposal includes:

• $42.2 million to continue universal school meals
• $38.5 million for career technical education
• $30 million for reading intervention programs
• $14 million for early literacy and reading support

Higher education

Higher education funding would total $1.48 billion under the proposal, including $168 million for the Opportunity Scholarship program. State officials say the scholarship has contributed to more than 20,900 graduates since spring 2024 and reversed a decade-long decline in college enrollment.

Health care and federal funding offsets

The budget proposal sets aside funding to blunt potential federal cuts, including $92.9 million to maintain Medicaid coverage for enrollees who could lose eligibility. It also includes $81.1 million to support insurance affordability through the BeWellNM exchange and $37 million to offset reduced federal SNAP reimbursements.

Infrastructure, water and public safety

The proposal includes $232 million for water security projects connected to the state’s 50-Year Water Action Plan and $100 million for statewide road construction and maintenance.

Specific water investments include $65 million for the Strategic Water Supply Fund, $35 million for Indian water rights settlements and $22 million for aquifer monitoring and mapping. An additional $60 million would be directed to the New Mexico Match Fund to help communities compete for federal infrastructure grants.

Public safety funding includes $13.5 million for certified law enforcement and fire response pay increases, $3 million for felony warrant enforcement and $2.5 million to maintain Organized Crime Commission operations.

Housing

The proposal recommends $65 million for affordable housing programs and $45 million for initiatives aimed at addressing homelessness.

The executive budget arrives roughly one month before the start of the 2026 legislative session, when lawmakers will begin negotiations over a final spending plan.