Lawmakers will appropriate a record amount of state money in 2022, thanks to unprecedented oil and gas production. Revenue to pay for year-over-year spending, versus one-time costs, in the fiscal year that begins July 1 is projected to go up by 11%, and most of that — 60% — is due to New Mexico’s dominant industry.
We’ve been here before — entering a legislative session flush with cash with projections that an oil and gas boom will last years. But budget leaders at the Legislature know better, precisely because they’ve experienced first-hand the volatile roller coaster of the oil and gas industry’s notorious boom-bust cycles.
A graph put together by the Legislative Finance Committee demonstrates the past turbulence aptly.
Two years ago, in 2020, state lawmakers went on a spending spree due to robust oil and gas production that economists and industry experts predicted would continue for a decade or more, only to return to Santa Fe a few months later to adjust spending after COVID-19 shut down the global economy.
It was an extraordinary moment, one that demonstrated the wisdom of caution when betting on long-term strong oil and gas production.
And, yet, this is where state lawmakers find themselves in January 2022 as oil and gas production has climbed to its pre-COVID peak.
Despite aspirations to wean itself from over-reliance on fossil fuels, New Mexico continues to reap the benefits of oil and gas production, to the tune of $1.6 billion in new money. That’s the amount of dollars coming in for fiscal year 2023 over the expenses of this fiscal year, which ends June 30.
The debate over how cautious to be is playing out in talks about the state’s public education.
As the single-largest item in New Mexico’s state budget, public education commands a central role in every legislative session.
This year is no different, except perhaps in the size of the windfall New Mexico is experiencing and how much cash Gov. Michelle Lujan Grisham and the Legislature want to give public schools and classroom teachers.
The Legislature’s budget arm, the Legislative Finance Committee, proposes spending $421 million more — 12% — over this fiscal year. The governor is in the same vicinity.
Part of the reason for the intense focus is the state’s continuing attempt to right generational education inequities identified in a 2018 landmark court ruling that found New Mexico guilty of violating its responsibility to educate all children equitably.
That generational inequity has contributed to differing education outcomes for groups of students by race or ethnicity, with fewer non-white students graduating than their White peers and performing poorer in reading and math proficiency.
A consensus has emerged in recent years among policy makers that more should be spent to address these inequities. You can see it in both the legislative and governor’s budget recommendations for the state’s fiscal year that starts July 1.
The battle will focus on the amount of the spending increase — a coalition of advocates from disparate communities, including the state’s tribal nations, will push the Legislature and Lujan Grisham to spend more than they’ve recommended. And whether to fold whatever increase emerges from this year’s session into the budget as a year-over-year cost — called recurring in statehouse lingo — or as one-time money — called nonrecurring — that advocates must fight each year to include in state spending.
As the Tribal Education Alliance noted in a recent handout, “the ultimate goal is to create a permanent source of state funding for Tribes that requires no applications and does not revert back year after year.”
But a large portion of this year’s proposed new education spending is about the state’s teachers. Both Lujan Grisham and legislators want to make them the best paid in the region when compared to states like Texas, Utah, Arizona, Oklahoma and Colorado.
They’re about middling right now.
To that end, Lujan Grisham and the Legislature have proposed spending around $200 million more to increase salary minimums for Level 1, 2, and 3 teachers — to $50,000, $60,000, and $70,000. The Legislature’s recommendation is slightly larger, with their proposal paying Level 1 teachers $51,000.
The proposed pay increases aren’t being made in a vacuum.
Currently, New Mexico is hemorrhaging teachers. There’s an explosion in vacancies — there are 1,048 vacant teaching positions, nearly double the 571 reported last year, according to the state Public Education Department. And there is a coming surge in retirements. Turns out. stress is up in a job that is already tough thanks to a hard-to-shake pandemic, according to a recent RAND corporation survey of teachers, and New Mexico is no exception.
Complicating this challenging environment is COVID.
Earlier this month, the Public Education Department reported to state lawmakers that chronic absenteeism in public schools has nearly doubled since the advent of COVID-19. Meanwhile, the percent of students proficient in reading and math in schools participating in a survey declined by 3 percentage points and 8.4 percentage points, respectively, from 2019 to 2021.
The state’s rosy financial picture presents the perfect opportunity to strengthen public education in New Mexico, policy makers agree.
But it’s clear from the past that New Mexico’s rosy finances won’t continue forever, while the challenges the state confronts likely will take generations to address.