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SANTA FE, N.M. (AP) — New Mexico lawmakers warned Friday that state pay raises may have to be put on hold because of low energy prices and weaker-than-expected tax revenues.
Funding for education, Medicaid and public safety would grow the most under a legislative budget plan that calls for an additional $230.7 million in spending over the previous year, a 3.7 percent rise.
Of that increase, nearly $78 million is intended for pay raises, primarily for school teachers.
The Legislative Finance Committee said the salary increases should not be funded unless state revenues reach projected levels. The committee's nearly $6.5 billion budget proposal forms the foundation for spending decisions when lawmakers convene for a 30-day session beginning Jan. 19.
"Oil prices have been even worse than we projected a year ago and the forecast doesn't look much better going forward," John Arthur Smith, D-Deming, chairman of the finance committee, said in a statement. "To be responsible, we have to be cautious."
In December, New Mexico lowered its estimate for new revenue downward by $62 million to $232 million based on reduced severance taxes and royalties tied to oil and natural gas production.
Low gasoline prices were expected to give a boost to New Mexico's economy and state government revenues, but sales tax-related receipts in recent months have been lower than anticipated. Gross receipts tax revenues fell 13 percent between July and October 2015 compared with the previous year.
The legislative budget plan resembles recommendations already put forward by Gov. Susana Martinez. Both emphasize Medicaid, education, early childhood development and public safety.
Where the governor asked for a $2,000 base pay raise for new teachers, the finance committee instead recommended a $1,000 increase to $35,000 with cost-of-living increases for all public school employees.
The legislative plan calls for a greater increase in spending on Medicaid — an additional $79 million. The increase would cover increased enrollment and offset a drop in tobacco settlement revenue.
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