Gov. Michelle Lujan Grisham on Tuesday authorized an amended Fiscal Year 2021 state budget, using her line-item veto authority to restore legislative cuts to public education and other areas while employing state reserves, spending reductions and federal monies to patch a revenue shortfall caused by the economic fallout of the COVID-19 pandemic.
The governor, in signing House Bill 1, vetoed more than $30 million in budget cuts, restoring funding that had been slated for reduction for public school support, culturally and linguistically relevant instructional materials, the Opportunity Scholarship and more.
The revised budget for fiscal year 2021, which begins Wednesday, totals $7.22 million, down from the $7.6 billion plan approved in February. Overall, recurring general fund appropriations were reduced by roughly $415 million for Fiscal Year 2021; non-recurring general fund appropriations were reduced by roughly $102 million in Fiscal Year 2020 and $184 million in Fiscal Year 2021.
State reserves in the new budget stand at 11.3 percent.
“My administration has from day one emphasized the importance of expanding the state’s reserves; I am glad to have done that work on the front end because it has given us needed flexibility as we move forward,” Gov. Lujan Grisham said. “In our fiscal approach, the ultimate goal will always be a responsible and responsive budget and a state government that meets New Mexicans directly where their needs are.”
The governor enabled the use of $750 million from the federal CARES Act for revenue backfill. The governor also announced her decision to allocate funding from the federal legislation in order to provide $140 million for COVID-19 direct expenditures in the state, $150 million for city and county grants and $28 million for tribal government grants.
Though the governor advocated for retaining a greater percentage of pay increases for educators, after approving the budget bill sent to her by the Legislature, educators will receive 1 percent pay raises.
House Bill 1 authorizes the Department of Finance and Administration to reduce state agency budgets an additional 2 percent if general fund revenues are insufficient.
“Given the crisis that has enveloped us and the hard decisions that have had to be made, I’m proud that we have prudently, wisely used all our resources to maintain our forward trajectory, especially for education, while also keeping a clear eye on the future,” the governor said. “These are difficult decisions to make, and again, I congratulate the Legislature for its diligent work amid unprecedented conditions on behalf of New Mexicans. This budget includes hundreds of millions in investments in small businesses and local governments and economies and preserves much of the essential progress we have begun to make in our public education system as we begin to navigate a new global economic reality.
“The COVID-19 pandemic has caused countless hardships all across our state, and our state finances are no exception” the governor said. “Let me be clear: The work of rebuilding our state economy has only begun. We face another serious shortfall next year, but we will not be deterred from our work building a more robust and inclusive economy than ever before as we continue to fight the COVID-19 pandemic with everything we’ve got.
“I want New Mexicans to know: We have heard you, and this state will invest in you and deliver for you throughout this crisis, throughout the recovery process and into the bright future we will build together on the other side.”