STATE News:

• State Budget Geared to Reform Education, Increase Pay for Entering and High-Performing Teachers, Expand Health Care Workforce and Grow Economy

Santa Fe —Today, Gov. Susana Martinez announced her Fiscal Year 2015 budget proposal, which continues the Governor’s commitment to responsible budgeting, particularly during uncertain economic times at the national level.  The Governor’s budget calls for significant investments in education reform and a commitment to tackling pressing economic issues head-on – including expanding the health care workforce to meet unprecedented demands for primary care services, investing in water infrastructure and research throughout the state to lay a firmer foundation for economic growth, and enacting reforms in higher education and our state’s tax code to grow, attract and develop new research, innovation, and high-tech firms in New Mexico. 

After closing the state’s largest structural budget deficit three years ago, New Mexico’s fiscal position remains strong and steady. Projected revenues once again exceed last year’s spending, by roughly $293 million, and thanks to spending restraint, the state’s reserve levels stand at just under 10 percent – an important feat, given the various revenue and employment impacts of arbitrary federal budget cuts and general dysfunction in Washington, D.C.   

“Job number one for the upcoming session is passing a responsible state budget that reflects our shared priorities,” Martinez said. “There continues to be a great deal of uncertainty in the national economy and federal government that hurts New Mexico in a disproportionate way.  We’re in a sound fiscal position today because of bipartisan efforts over the past few years to ensure that we live within our means and focus intently on priority areas – like educating our children and growing our economy.  We need to exercise similar restraint, and have a similar focus this time around.”

The Governor’s $6.07 billion budget proposal, which represents an increase in recurring state spending of 3.0 percent (or $178.6 million), can be found online on the Governor’s website at www.governor.state.nm.us.

“Unprecedented changes in health care threaten to drive up costs and leave thousands without the primary care services they need.  We can lead the nation in responding to this challenge by increasing the number of primary care practitioners, especially in rural areas,” continued Governor Martinez.  “We also know that investing in water infrastructure and research can lay a strong foundation for economic growth.  And, by encouraging greater innovation, we can strengthen New Mexico’s economic position as a leader in high-tech research and development.  These are critical efforts that will help us continue to diversify our economy, compete with surrounding states for jobs, and establish New Mexico as a state that leads in the face of economic challenges.” 

The Governor’s FY 2015 budget includes: 

• $100 million in new funding to support the needs of New Mexico’s classrooms and public school students.  This represents 56 percent of the Governor’s proposed total new spending. In addition to covering basic school services, such as higher utilities and enrollment growth, this additional funding will be invested, in part, in raising the minimum starting annual teacher salary in New Mexico from $30,000 to $33,000 and rewarding the state’s highest-performing teachers and school leaders with monetary stipends – initiatives that cost roughly $18.6 million. 

Additional education reform proposals designed to help struggling students and schools succeed, as well as to graduate students at a higher rate and prepare them for college or the workforce include: 

• • $15.5 million for the “New Mexico Reads to Lead” program, which deploys early childhood reading initiatives designed to identify and support struggling readers between kindergarten and the third grade.
     

  • $9 million to directly help the state’s lowest-performing schools improve their student achievement. This is an increase of $5 million over last year’s funding, which will allow for the same training and research-based interventions in “C” schools that have been reserved only for “D” and “F” schools over the past two years, as well as support struggling schools that have had their federal funding cut due to sequestration.
     

  • $1.5 million to expand the use of “parent portals” in New Mexico schools; these are online tools that parents can use daily to track their child’s attendance, homework assignments, and grades, as well as receive regular feedback from their teacher(s).
     

  • $2.5 million for STEM-related initiatives to recruit and retain math and science teachers in communities and schools that have the greatest need.
     

  • $500,000 to help start additional early college high schools throughout New Mexico.
     

  • Nearly $36 million in funding for Pre-K and K-3 Plus, an increase of $5 million over last year’s funding. Under Martinez’s administration, funding and participation in Pre-K has more than doubled, and K-3 Plus is now a permanent, well-utilized intervention that allows over 11,000 struggling students to receive additional summer instruction and help each year. 

The Governor’s budget also dramatically increases funding for textbooks and instructional materials in New Mexico classrooms – from $21 million to $30 million, a 43 percent increase. 

• $5 million to significantly expand New Mexico’s health care workforce, in response to state and federal policy changes that will add up to an additional 205,000 New Mexicans to Medicaid, and which are designed to increase the use of primary care facilities, as opposed to costly emergency rooms. These proposals include:
   

  • $1.5 million to double the number of awards in New Mexico’s nursing loan-for-service and health professional loan repayment programs (as well as add 6 new dental slots through the Western Interstate Commission for Higher Education). Over 10 years, this could result in up to an additional 720 new primary care practitioners who are committed to work for a period of time in rural areas of New Mexico.
     

  • Roughly $1.6 million to add 24 new Nurse Practitioner slots and $750,000 to expand the number of family practice residency slots by 7 at the University of New Mexico.
     

  • $500,000 to institute the first-ever statewide training and voluntary certification program for community health workers throughout New Mexico.
     

  • $600,000 to expand the use of tele-health services, a more cost-effective way to correct rural-area patients and their practitioners to other specialists and physicians.
     

  • Over $200,000 in marketing funds to recruit nurse practitioners to New Mexico, seizing on the favorable licensure and practice climate for NP’s in the state.
     

• $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 for the third straight year, with overall tourism numbers increasing by 2.6 percent in 2012, leading to a record level of 32 million visitors to our state. Tourism spending and employment have both surpassed pre-recession levels, with tourism spending increasing by 7 percent in 2012.
   

• $1.0 million to make the “Returning Heroes” firefighting program permanent – an initiative launched by Governor Martinez to hire returning veterans and train them to battle wildfires.
   

• $14.2 million in targeted compensation increases for state employees in positions that are traditionally the hardest to recruit and retain. This includes $4.5 million to implement the first phase of an overhaul of the pay structure for the New Mexico State Police. The remaining funding will be used to enact complete reforms of the classification structure for correctional officers, protective services employees, IT workers throughout state government, and health and engineering professionals. These targeted reforms and classification overhauls will impact 32 percent of the state workforce; the Governor hopes to enact similar classification reforms for the rest of state government over the next one to two years.
   

• $2 million in new water research funding through the New Mexico Water Resources Research Institute and $450,000 to establish two funds designed to provide immediate assistance to any New Mexico community that goes dry due to a water supply emergency and targeted technical assistance to vulnerable communities to implement changes necessary to prevent these emergencies and ensure a clean water supply for their users. The Governor also previously proposed spending $112 million, or 60 percent, of the State’s capital outlay budget on water infrastructure projects.
   

• $25 million in additional funding for services for the most vulnerable, including nursing home reimbursements, and transitional living and employment support for behavioral health patients. This funding is available, in part, due to state savings resulting from the recent decision to expand Medicaid. 

Martinez will also work with legislators to pass a series of reforms aimed at encouraging greater innovation in New Mexico, with the goal of supporting and expanding our high-tech workforce and industry base. This includes allocating $2 million to the Technology Research Collaborative in order to fund enterprising projects with commercial potential that are the result of partnerships between researchers at New Mexico’s laboratories and universities, and the private sector. Secondly, by reforming the Higher Education Endowment Fund and investing $7.5 million in it, we can also attract top researchers and professors to state institutions in order to train up and recruit students who are able to serve as a stronger high-tech workforce in New Mexico or become innovators and entrepreneurs themselves.

Finally, the Governor will seek to strengthen our tax treatment of innovation by expanding the use of the Angel Investment credit, allowing for greater private investment in small New Mexico start-ups, and reforming the Technology Jobs Tax Credit and current research and development tax credit to better support New Mexico companies that are creating jobs through their research and development activities. 

The Governor’s budget also calls on the Legislature to begin the process of making the Job Training Incentive Program (JTIP) permanent in New Mexico. This incentive encourages businesses to expand or relocate in New Mexico by committing the state to pay part of a new employee’s salary while he/she is being trained.  In the past, JTIP has been funded on a year-to-year basis, in an unpredictable manner; by moving $1.5 million this year into the state’s recurring budget, and additional funding in the years to come, it will provide a greater level of certainty for economic developers and companies looking to expand or move to New Mexico.

The budget also provides for at least $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 the state.

With respect to non-recurring spending, the Governor proposes $111.8 million in FY14 and FY15 to cover one-time obligations and various contingency items. These include funding for the transition to Common Core standards in New Mexico classrooms, emergency supplemental funding for small school districts, critical IT projects in state agencies, and $10 million in contingency funding for special education maintenance-of-effort obligations. In addition, the Governor proposes to spend $11 million to meet Legislative Lottery Scholarship obligations to New Mexico students for the upcoming Spring semester, while urging lawmakers to enact broad-based, balanced reforms to the structure of the scholarship in order to ensure solvency for future semesters. And, to make up for lost Tobacco Settlement revenue, which goes in part to the Lottery Scholarship, the Governor is proposing $12 million to backfill lost revenue to the scholarship and several health and early childhood programs. 

$20 million is estimated to be the non-recurring cost of back-pay compensation to comply with last year’s court ruling on the FY09 labor union lawsuit. The recurring cost of compliance is currently projected to be much less, at approximately $2 million annually.  

Other non-recurring items, discussed earlier, include $1.5 million for JTIP (in addition to the proposed $1.5 million in recurring funds), $7.5 million to recruit researchers and professors through the Higher Education Endowment Fund, and $10 million for LEDA grants. 

Under the Governor’s budget, proposed recurring and non-recurring spending, when added together, equal the amount of expected “new money” available for the 2014 legislative session. As a result, if enacted, the Governor’s budget would not draw down the state’s savings account – maintaining a healthy and responsible reserve level of just under 10 percent.