Governor Introduces Fiscal Year 2014 Budget


SANTA FE–Under the backdrop of federal economic uncertainty, Gov. Susana Martinez has introduced a state budget that she says invests in reforming education, helping small businesses grow, and making New Mexico’s economy more competitive.

Martinez announced her Fiscal Year 2014 budget proposal Thursday, saying it continues her commitment to responsible budgeting – particularly during such uncertain economic times at the national level.

The governor’s budget calls for significant investments in education reform, health care for those in need, and economic development efforts to help small businesses train and hire new workers and better allow New Mexico to compete for jobs.

After closing the state’s largest structural budget deficit two years ago, New Mexico’s fiscal position is once again strong and steady.

Revenues have outpaced projections and the state’s reserves have more than tripled since 2010 – to over 10 percent.

“While we’ve succeeded in putting our financial house back in order, we face serious challenges that require us to budget cautiously and invest in growing our economy,” Martinez said in a news release. “Our national economy is stagnant, small business owners are facing tremendous uncertainty, and federal budget cuts continue to threaten jobs in New Mexico. Now more than ever, we must focus intently on competing for private sector jobs, preparing our students to graduate from high school and join the workforce or succeed in college, and ensuring that our kids can read so that they can succeed in life.

The Governor’s FY 2014 budget includes:

  • $101 million in new funding to support the needs of New Mexico’s classrooms and public school students. Roughly $71 million of this new funding would cover basic school services, such as higher utilities, enrollment growth, and a shift in pension contributions from teachers to the state. The additional $30 million will be invested directly in education reforms to help struggling students and schools succeed, as well as to graduate students at a higher rate and prepare them for college or New Mexico’s workforce.

These reforms include:

  • $13.3 million for the “New Mexico Reads to Lead” program, which comprises early childhood reading initiatives designed to identify and support struggling readers between kindergarten and the third grade. This is $5 million more than what was approved last year.
  • More than $4.74 million to directly help the state’s lowest-performing schools improve their student achievement.
  • Nearly $4.75 million to expand access to Advanced Placement courses, provide all New Mexico students with free college placement or workforce diagnostic exams, expand technical and vocational training in rural areas, and pilot early college high schools in New Mexico communities to develop workforce skills among our students and match them to trade employment following graduation.
  • More than $11.3 million to reward our highest-performing teachers.
  • $2 million for STEM-related initiatives to hire additional math and science teachers in communities and schools that have the greatest need.
  • $200,000 to continue providing reading books to all first graders statewide.
  • Approximately $28 million in new funding for Medicaid services and program improvements, $19 million of which is general fund revenue that replaces tobacco settlement funding that has been spent on Medicaid in the past for budget solvency purposes. The Governor’s budget incorporates her decision to expand Medicaid in New Mexico, as a result of the federal Patient Protection and Affordable Care Act. The expansion of Medicaid eligibility to up to 170,000 people by 2020, comprised largely of adults below 138 percent of the federal poverty level, is based on a commitment from the federal government to pay 100 percent of the cost through 2016, and tapering down to 90 percent of the cost by 2020. In FY14, Medicaid expansion reduces state spending on Medicaid and related Human Services Department (HSD) programs by a net of roughly $16 million, as a result of individuals who are currently being covered by the State Coverage Insurance program (SCI) being moved onto Medicaid.

NOTE: If the federal government breaks its funding promises for Medicaid expansion, the Governor’s budget reflects the state’s intent to prevent low-income children or other prior Medicaid recipients from being removed from the program as a result.

The most recent additions to the program, particularly adults below 138 percent of the FPL, would be the first to be moved off of Medicaid if federal funding fails.

In addition, the Martinez Administration has drafted “Centennial Care,” an innovative plan for managing the state’s Medicaid program, which is designed to help to reduce the future rate of growth in the cost of providing Medicaid services in New Mexico.

$2.5 million in new funding for the Department of Tourism to expand the advertising of New Mexico to additional outside markets. Tourism is on the rise in New Mexico, increasing by nearly 5 percent in 2011, greater than the 2.9 percent increase in neighboring Arizona or 1 percent increase in Colorado.

The number of visitors making New Mexico their primary destination has also risen – by 12.4 percent.

$8.5 million in new funding for the Department of Public Safety and Department of Corrections for additional police cars and, in part, to recruit additional New Mexico State Police officers and correctional officers for state prison facilities.

Approximately $7 million (including $5 million from the general fund and $2 million from TANF funds in new funding for childcare assistance through the Children, Youth and Families Department. Over 1,600 additional kids will be able to receive child care services through these funds.

$750,000 in new funding for the Racing Commission to implement the board’s numerous reforms to prevent and detect the doping of racehorses at New Mexico racetracks.

Martinez will also work with legislators to pass an aggressive economic development package designed to make New Mexico’s economy more competitive and support New Mexico small businesses in their efforts to train and hire new workers.

In order to level the playing field so that we can compete for jobs, the Governor specifically supports lowering the tax rate that large companies pay in New Mexico from 7.6 percent (the second-highest rate in the western United States) to 4.9 percent.

She will also ask the Legislature to adopt a single-weighted sales factor that would stop the punishment of companies that want to make New Mexico their home and hire New Mexico workers, but whose market for their goods lies outside of our state.

The Governor’s budget also calls for an investment of $4.75 million in the Job Training Incentive Program (JTIP), which encourages hiring by paying part of a new employee’s salary while he/she is being trained, and she supports a new jobs tax credit, confined to the next two years, that would specifically reward small business owners who make the decision to hire and retain new workers during this period of economic uncertainty.

The budget also provides $10 million for Local Economic Development Act (LEDA) grants designed to help the state and local communities invest in infrastructure projects to attract specific companies to New Mexico.

Under state law, given New Mexico’s currently strong fiscal position, the state’s share of the contribution to employee pensions will increase by 1.5 percent, and the employees’ share will be reduced by this same amount. The statewide general fund cost of this pension shift is over $40 million.

The Governor’s $5.88 billion budget proposal, which represents an increase in state spending of 4.1 percent, can be found online on the Governor’s website at
Below is a copy of the letter that the Governor provided at the front of her budget recommendation.

The Governor’s budget proposal also calls for $127.5 million in non-recurring spending, including funding for the transition to Common Core standards in New Mexico classrooms, emergency supplemental funding for particularly small school districts, funding to implement the state’s new teacher evaluation system, $10 million for LEDA grants, and $4.75 million for JTIP.

Susana Martinez is the 31st and current Governor of New Mexico. Martinez, a Republican since 1995, is the first female governor of New Mexico and the first female Hispanic governor in the United States.

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