Legislative Finance Committee unveils $10.8 billion recurring budget with focuses on education, health care and behavioral health

The Legislative Finance Committee on Thursday presented its fiscal year 2026 budget recommendation that it says would total $10,800,000,000 in recurring general fund spending — about a 5% year-over-year increase. Senator Munoz, chair of the committee, said the package is intended to put New Mexico on “a new path and a clear trajectory for long term success.”

The budget proposal front-loads spending on education, health care and behavioral health while pairing one-time investments in infrastructure, housing and water projects with measures intended to preserve future fiscal stability. The committee’s leadership said the plan uses nonrecurring dollars for immediate needs while aiming to preserve recurring revenue for sustained programs.

“The LFC's '26 budget represents a to total of $10,800,000,000 in reoccurring general fund spending, which is about a 5% year over year increase,” Senator Munoz said. Vice Chair Representative Small added that the panel traveled the state to shape the proposal and said the budget is designed to “make New Mexicans' lives better immediately and setting a path over the next 5, 10, and even longer” years.

Major recurring and programmatic highlights the committee cited include a roughly $15,000,000,000 recommendation for health care funding (described in the presentation as roughly a 23% increase for the Health Care Authority compared with the prior year), increased pay for teachers and school employees, and targeted funding intended to strengthen hospitals and behavioral health systems. Representative Dixon, presenting the health care portion, said the recommendation “focuses on performance and oversight, working to strengthen our hospital and behavioral health care system.”

On early childhood, the committee recommended increases drawn from both general fund and trust fund sources. Committee presenters said the LFC recommends directing trust fund distributions to a set of early childhood priorities including home visiting, pre-K quality and expansion, tribal language support, and child care assistance; presenters said the FY26 trust fund distribution was recommended at $299,000,000 and that the committee’s total early childhood recommendation amounted to $842,800,000.

Leaders highlighted a major behavioral health push in the package. Senate leadership said lawmakers intend to file legislation (referred to in the briefing as “Senate Bill 1”) to create a behavioral health trust fund, with the bill initially seeking a $1 billion target for the permanent fund and additional one-time investments to address immediate need. Martin Anderson, a committee speaker, described the LFC proposal as “a very strong start and down payment when it comes to behavioral health. Over $200,000,000 addressing everything from behavioral health care professionals to housing to the linkages and many other components.”

Housing and homelessness responses were a marked part of the presentation. The committee proposed new and expanded funding for supportive housing, medical respite for people exiting hospitals, local-government planning and continuum-of-care efforts, and a $50,000,000 infusion to the Mortgage Finance Authority/Affordable Housing Trust Fund. Presenters said supportive housing funding is intended to combine housing with clinical and behavioral supports for people with substance use or mental health disorders. The briefing also cited approximately $48,900,000 for a three-year Grow pilot at the Health Care Authority to provide medical respite for the unhoused.

The budget also directs large nonrecurring sums toward water and natural resources: presenters said the LFC set aside nearly $300,000,000 in nonrecurring investments for water quality and quantity projects, with much of that intended for the Water Trust Board. Committee members said the scale of nonrecurring water funding is the largest in recent cycles and is intended to help rural communities with wastewater and water-line projects and to support water reuse and conservation.

Committee leaders repeatedly framed the package as fiscally responsible, noting current revenue strength and the need to avoid steep spending growth that could lead to deficits. Senator Munoz said New Mexico is experiencing steady growth but warned that higher rates of spending growth could threaten stability. On the balance between the executive and legislative budgets, leaders said the differences were small and that behavioral health and some infrastructure choices accounted for most remaining variances.

During a question-and-answer session, lawmakers addressed other policy questions raised by reporters, including whether the budget contemplates a tax package (leaders said they had not heard of a tax package under active discussion), implications if federal funding streams change, and how the committee plans to ensure accountability for recruitment and retention dollars for first responders and corrections. The committee emphasized oversight and accountability as a central function: “One of our most important functions is accountability to ensure that dollars that are set aside and invested by the legislature ... reach their intended area,” Martin Anderson said.

No formal votes or enacted legislation were announced at the briefing. Committee presenters urged that the proposal is an initial legislative recommendation to guide the upcoming session and said specific bill language, funding sources and statutory mechanics will be worked out during the 60-day session.

The committee recommended the package as a starting point for the 2025 legislative session and said staff would provide further details and briefings as bills are filed and the session proceeds.