LEGISLATIVE FINANCE COMMITTEE LEGISLATING FOR RESULTS

1 Volume 1 LEGISLATIVE FINANCE COMMITTEE Report For Fiscal Year 2023 NEW MEXICOLEGISLATIVE FINANCE COMMITTEELEGISLATING FOR RESULTS :POLICY AND PERFORMANCE ANALYSISR eport to the Fifty-Fifth Legislature, Second SessionVOLUME 1 January 2022 for the 2023 Fiscal Yearlfc fy23 vol 1 cover 2lfc fy23 vol 1 cover 212/20/2021 7:28:50 PM12/20/2021 7:28:50 PMHonorable MembersFifty-Fifth Legislature, Second SessionState CapitolSanta Fe, New Mexico 87501 Dear Fellow Legislators:Pursuant to Section 2-5-4 NMSA 1978, the fiscal year 2023 budget recommendation of the LEGISLATIVE FINANCE COMMITTEE is provided to Mexico continues to ride a roller-coaster of finances, reliant on the volatile oil and gas industry for much of its revenue and subject to the pandemic-induced economic storm buffeting the nation.

2 This year we are on an upward trajectory, with federal funds stimulating the economy, oil production surging ahead of other states, and demand for natural gas growing for the first time in years. But we know from experience, we could easily be on a downward plunge. Fortunately, New Mexico has developed the tools cautious spending, significant reserves, revenue stabilization funds to even out the ups and has been well-publicized, New Mexico is projected to have $ billion in general fund revenue in the 2022-2023 fiscal year, including $ billion in new money, recurring revenue less prior-year planned spending available for expanded funding in FY23.

3 The COMMITTEE recommendation totals $ billion, a 14 percent increase over FY22 operating budgets. About half of the increase, over $496 million, would be used to replace federal funds used on a one-time basis to sustain state services during the pandemic. The plan would leave reserves at 30 percent of planned spending, similar to the effective reserve level in place at the onset of the pandemic. The COMMITTEE s spending plan prioritizes investment into those programs we know will improve the lives of New Mexicans, efforts to improve service levels for vulnerable New Mexicans and eliminate the waiting lists for critical services.

4 And improved compensation for public education and state government workers to keep salaries competitive and help with the recruitment and retention of quality public COMMITTEE s plan continues the state s commitment to early childhood with a percent increase in general fund spending for the Early Childhood Education and Care department over the current year budget and additional spending from the newly created early childhood care and education trust fund to expand prekindergarten, early prekindergarten, and tribal early childhood programs, and home-visiting services to new parents and bolster pay and other supports for the early childhood workforce.

5 In addition, the COMMITTEE proposes a 7 percent increase for the Children, Youth and Families department focusing on evidence-based practices in child protective services, behavioral health, domestic violence, extended foster care, and supportive public schools, the COMMITTEE s recommendation totals $ billion, a 12 percent overall increase that includes $225 million for a pay plan that provides a minimum salary of $ an hour and increases the minimum salaries for each of the teacher licensing levels. The recommendation further provides $ million in nonrecurring funds Representative Patricia A. LundstromChairwomanRepresentative Gail ArmstrongRepresentative Jack ChatfieldRepresentative Randal S.

6 CrowderRepresentative Harry GarciaRepresentative Dayan Hochman-VigilRepresentative Javier MartinezRepresentative Nathan P. SmallRepresentative Candie G. SweetserState of New MexicoLEGISLATIVE FINANCE COMMITTEED avid AbbeyDirector325 Don Gaspar, Suite 101 Santa Fe, NM 87501 Phone (505) 986-4550 Fax: (505) 986-4545 Senator George K. Mu ozVice ChairSenator Pete CamposSenator Roberto Bobby J. GonzalesSenator Siah Correa HemphillSenator Gay G. KernanSenator Steven P. NevilleSenator Nancy RodriguezSenator Pat Woodsfor education services, including $180 million from the public education reform fund to address issues raised by the Martinez-Yazzie education sufficiency lawsuit.

7 The recommendation requires all schools to participate in flexible extended learning approaches and expands the Public Education department budget by almost $5 million to improve oversight of school budgets and higher education, the COMMITTEE recommends a percent increase in support for the core functions of the state s colleges and universities and recommends an overall 11 percent increase for research and public service projects across all institutions and categorical programs. The COMMITTEE proposes several new categorical programs for FY23, including tribal education initiatives to combat the achievement gap for Native American college students, teacher pipeline programs to alleviate teacher shortages, and $6 million in student support and wraparound services to improve retention and graduation rates.

8 Recognizing the growing healthcare workforce needs, the recommendation also increases funding for nursing and medical residency-related projects by $ million, a 15 percent increase from COMMITTEE recommends a 27 percent increase in state support for the Medicaid program, primarily to backfill federal funds that increased substantially during the pandemic and are slated to wind down in FY23. The COMMITTEE s proposals for the Human Services and Health departments also include funds to raise healthcare provider rates and expand support for behavioral health and one-time federal funds to reduce the waiting list for services for people with developmental addition, the COMMITTEE includes a 5 percent increase for courts that includes funds for new district court judgeships in the 5th and 13th judicial districts, a percent increase in general fund support for the department of Public Safety mostly for targeted compensation increases and staff expansions.

9 And a small cut in general fund revenues for the Corrections department , a reflection of declining inmate , the COMMITTEE s spending plan for recurring spending includes across-the-board salary increases for state, public school, and higher education employees, in addition to targeted increases, of 3 percent for the last quarter of FY22 and 4 percent starting in July 2022 and funding to protect employees from rising healthcare and pension costs. The COMMITTEE s proposal also includes extensive plans for spending one-time federal funds and excess FY22 revenue on information technology and other would like to thank the membership of the LEGISLATIVE FINANCE COMMITTEE for their hard work on behalf of the people of New Mexico and the LFC staff for its thoughtfulness and diligence on this very difficult task.

10 Together, we have prepared a responsible budget that invests in the people of New ,Representative Patricia Patty LundstromChairwomanTable of Contentsreport of the LEGISLATIVE FINANCE Committeeto theFifty-Fifth Legislature,Second SessionVolume ILegislating for RESULTS : Policy and Performance AnalysisJanuary 2022forFiscal Year 2023 REPRESENTATIVEPATRICIA LUNDSTROMCHAIRWOMANSENATORGEORGE MU OZVICE CHAIRMANDAVID ABBEYDIRECTORA ccountability in Government ..95 Public Education ..98 Higher Education ..102 Early Childhood Education and Care , Youth and Families department ..109 Economic Development department ..112 Tourism department .