State legislative leaders on Wednesday released a $11.1 billion budget proposal that fails to fully fund one of outgoing New Mexico Gov. Michelle Lujan Grisham’s signature policies: universal child care for families with young children.
The governor announced last September that the state would eliminate income requirements for families to receive waivers for their portions — copayments — of child care costs. Previously, only families that earned less than 400% of the federal poverty level received copay waivers.
In enacting that change, New Mexico became the first state in the nation to offer free universal childcare.
The state Early Childhood Education and Care Department officially launched the program in November. Last month, Lujan Grisham’s office released a budget proposal that includes $163.2 million from the state’s recurring general fund to keep the program running through July 2027. That represents a 54.1% increase from the previous year.
But in a news conference Wednesday at the Roundhouse, legislative leaders released their own budget proposal, which only increases ECECD’s appropriations from the general fund by $13.7 million, or 4.5%. They also reiterated that while New Mexico is in healthy financial shape compared with other states, market conditions and other indicators point toward more fiscal restraint in the upcoming year.
In detailed budget proposal documents from the Legislative Finance Committee, which drafted the proposal, analysts predict that universal free childcare will “create additional demand for Childcare Assistance without the necessary revenues to implement this policy decision should more people apply and qualify for subsidies.”
Sen. George Muñoz (D-Gallup), who chairs the Senate Finance Committee, also noted Lujan Grisham’s budget proposal includes spending that exceeds her second and final term in office, which ends Dec. 31 of this year.
“This governor is trying to spend into the next administration’s money,” Muñoz said at the news conference.
An ECECD program analysis shows costs for universal child care increasing for several years — funding for which would mostly come from state coffers — from a little over $445 million this fiscal year to nearly $730 million by fiscal year 2029.
LFC Chair Rep. Nathan Small (D-Las Cruces) told Source New Mexico on Wednesday that “all options are on the table” when it comes to reaching a compromise with the governor on one of her signature policies.
He expects the Legislature and the governor to “work closely” in search of other funding sources or a “prioritization system” that ensures those who most need childcare get it as the program builds additional capacity and hires more childcare providers.
“I want to emphasize that this is a start and that a great deal of the work is to come during the session,” he said.
He defended the Legislature’s funding proposal as prudent in the face of a worsening economy, while also maintaining funding for childcare subsidies for those “those who need it most.”
“In a year where we have more pressures, more storm clouds, economically and otherwise on the horizon, and less money coming in…we have to be very focused on sustainability,” he said. “You know, two and three and four and more years from now, what this could look like.”
The governor’s Communications Director Michael Coleman told Source in an emailed statement that the governor was “disappointed” by the Legislature’s proposal.
“Governor Lujan Grisham is disappointed by the LFC’s early childhood budget proposal, but she is not surprised—and she is not deterred,” he said. “Executive and legislative budgets are rarely aligned initially. The Governor is confident the Legislature will fund universal childcare at levels that match the public’s strong support for this historic initiative.”
Small said at the news conference Wednesday changes contained in the “One Big Beautiful Bill Act” President Donald Trump signed last year created “national headwinds,” along with other factors outside the state’s control, that spell the end of a multi-year streak of sharply growing state budgets.
To that end, the LFC’s budget’s recommendation calls for spending $11.1 billion from the state’s general fund, a 2.5%, or $268 million, increase over FY26 planned spending.
The governor’s budget recommendation calls for a bigger increase in spending, largely due to universal child care costs. She hopes to spend $11.3 billion, a 4.6% increase over last year.
