Legislative Finance Committee

Estimates of recurring revenue for the current budget year have been revised down $323 million from the August forecast, with the $13.383 billion now expected in total recurring revenue 1.6 percent less than revenue earned in the 2025 fiscal year that ended in June. However, while “total new money”—total revenues less total spending—is down, budget drafters still have the flexibility to increase recurring spending by reducing nonrecurring expenditures.

New Mexico’s public school capital outlay funding formula is more fair than the funding mechanisms in many states, but a growing number of requests for exceptions to the rules suggest the need for changes.

New Mexico juvenile justice reforms to divert low-risk offenders from confinement has led to far fewer youth in secure facilities, but the state lacks the prevention and treatment services to keep low-risk juveniles from returning to the justice system.

New Mexico has one of the highest poverty rates in the nation, but a shrinking but still generous benefits packages theoretically allows many families to meet their needs.

The Department of Transportation reports an overall deterioration of the state’s roads, with the 2024 annual road condition survey noting the lowest ratings in recent history, even as the Legislature might lose flexibility to supplement road funding.

The number of nonrecurring appropriations made by the Legislature to local governments has jumped from one for $250 thousand in FY18 to 33 for $232 million in FY26. At the same time, state capital outlay appropriations to local governments increased by 431 percent.

The Legislature has invested in high school career and technical education pilots and classroom infrastructure, but simply increasing funds for career and technical education may not lead to more robust programming and could lead to inefficient spending practices or reinforcement of the status quo.

General fund reserves have enough revenue to cover a “worst case” economic downturn, but current liabilities limit budget growth.