Governor signs state budget, capital outlay bills and tax package

SANTA FE - Governor Michelle Lujan Grisham today signed an $11.1 billion state budget for fiscal year 2027 that funds higher education, universal child care, road improvements, economic development initiatives and more.

The $11.1 billion general fund marks an increase of $339.5 million, or 3.1%, compared to the FY 2026 budget, while leaving reserves at 26.4%.

"Over the last seven years, we have fundamentally redefined New Mexico's future by prioritizing historic investments in universal child care, health care, public safety and more while achieving record job growth and the nation's largest drop in child poverty," said Governor Lujan Grisham. "We've built a strong foundation of opportunity for New Mexico families, and while this budget marks a massive leap forward, our work is far from finished."

"I'm signing this budget today as a commitment to New Mexico's long-term success and a promise to keep moving our state upward," the governor added.

Notable budget items include:

• $300 million for major higher education projects
• $210 million for transportation programs and projects
• $255 million for water and natural resource initiatives
• $160 million for year one of universal child care
• $150 million for quantum initiatives
• $110 million for statewide housing initiatives
• $35 million for career technical education
• $29 million for reading and math intervention programs
• $20 million for education fellows programs

Capital outlay

The governor also signed SB 240 - the capital outlay bill - and HB 248 - the general obligation bonds bill - providing more than $1.5 billion for schools, roads, housing, community centers and water conservation, among others.

Highlighted projects include:

• $546 million for the UNM School of Medicine
• $255 million for water and natural resource initiatives
• $210 million for transportation programs and projects
• $175 million for statewide housing and homelessness initiatives
• $75 million for the behavioral health institute in Las Vegas, NM
• $20 million for state parks
• $20 million for public safety
• $17.6 million for a reforestation center in Mora County
• $10 million for the homeland security emergency operation center
• $10 million for the child care facility revolving loan fund
• $10 million for early child care facilities at higher education institutions

Tax package

The governor also signed SB 151, the omnibus tax package. The bill includes:

• Physician income tax credits to boost healthcare recruitment and retention
• Extension of the high wage jobs tax credit, a recruitment tool for companies bringing high-paying jobs to New Mexico
• A new gross receipts tax deduction for affordable multifamily housing construction
• Income tax credits for local news publications and employers of local journalists
• Decouples components of New Mexico's corporate income tax from certain new federal deductions

The bill also includes a 1% pay increase for state employees.

SB 151 does not raise any taxes on New Mexico families.