With billions on the line, New NM federal funding legislative subcommittee meets for the first time
Members of the recently created Federal Funding Stabilization Subcommittee met for the first time Wednesday for briefings on how federal funding is funneled into New Mexico and how current and future cuts might impact the state
The subcommittee formed in response to the loss of funds and threats of cuts from the Trump administration to programs that affect state residents, including Medicaid, federal nutrition programs and programs run by the various state agencies. Lawmakers started with an overall look at where federal funding is allocated throughout the state.
New Mexico Department of Finance Secretary Wayne Propst explained to the committee that according to a Federal Funds Information for States report released last week, New Mexico is the top state receiving federal funds. The report is based on data from fiscal year 2023.
'The study confirmed that New Mexico is number one in terms of federal funding coming into the state,' Propst said. 'For every $1 in taxes that we send to the federal government, we receive approximately $3.21 back in New Mexico. That includes those direct payments, but it also includes the funding for our military bases, our national labs and other items.'
He said the state's overall budget for Fiscal Year 2026 is $33.16 billion, with 43.5%, $14.44 billion, funded by federal money. The Health Care Authority receives the most federal money — more than $11 million, which makes up about 74% of its annual budget this fiscal year.
Propst also noted that if Congress ends up passing the budget bill — which made its way out of the U.S. House of Representatives last week and will now be considered by the Senate — New Mexico will see impacts to Medicaid; a $290 billion reduction in funding for the Supplemental Nutrition Assistance Program; and a reduction in the federal oil and gas royalty rate from 16.67% to 12.5%.
NM reps say GOP bill will gut Medicaid and also reduce oil money that could help state save it
Eric Chenier, principal analyst for the Legislative Finance Committee, further broke down federal funding by state agencies, including the Early Childhood Education and Care Department, Higher Education Department, Department of Transportation and Department of Health. Chenier noted that as of May, the University of New Mexico, New Mexico State University and New Mexico Institute of Mining and Technology reported losing $36 million, $27.2 million and $2.5 million in federal grant revenue respectively.
Legislative Education Finance Committee Director John Sena delved into how federal funds are used for public education in New Mexico. He explained that the state is aware of several areas that have lost federal funding, including $12.3 million for Elementary and Secondary School Emergency Relief, which was awarded to the state during the COVID-19 pandemic; $5.1 million for the Teacher Quality Partnership Program, which funded residency programs and mentoring for 68 people; and $5 million for school-based mental health services, which supported programs in Silver City and the Central Region Educational Cooperative and puts 18 positions at risk.
AG Torrez joins lawsuit over federal education funds
Sen. Bill Soules (D-Las Cruces), co-chair of the subcommittee, added that he wants to see flexibility from the group as more changes are announced from the Trump administration.
'There are going to be things that come up that we haven't thought about. For instance, we're getting into fire season and lots of the fire response often comes from the federal government. That's somewhat more in question now. Is the state going to be responsible to uphold all of those? That could be a major budget area,' Soules said. 'There also, I think, are areas where already we're seeing some of our small businesses, because of tariffs, are closing down, pulling back, have lower amounts and stuff, which means that's less revenue coming in on the state level as those businesses close or have to lay off workers or things of that sort.'
The next subcommittee meeting is scheduled for July 1 and 2 in Santa Fe.
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