The state's increased spending is aligned with the surge in revenue collections, reaching unprecedented levels. Revised estimates this week predict legislators will have $892.3 million in "new" money next year, representing the difference between projected revenue and current total spending levels. This budget surplus is part of a multi-year revenue boom, primarily driven by record-high oil and natural gas production in southeast New Mexico's Permian Basin.

On December 12, 2024, Governor Michelle Lujan Grisham's office introduced a $10.9 billion spending plan aimed at boosting funding for road construction, homelessness, child care, and the state's long-term water supply. The proposal would increase overall state spending by approximately $720 million or 7% over current levels and includes pay raises for state employees and public school workers.

Lujan Grisham administration officials described the budget as prudent despite a 45% increase in recurring state spending since the governor took office in 2019. Finance and Administration Secretary Wayne Propst stated, "I do think it’s sustainable."

Although typically unveiled in January before the legislative session begins, this year's budget plan was released earlier to allow time for public input. Propst explained, "We feel that in the interest of transparency and to give time for public input … there’s no reason to wait until a week before the session."

The budget does not specifically propose tax cuts or rebates; however, these could be considered during the upcoming 60-day legislative session. The state has issued several rounds of tax rebates amid ongoing revenue growth, including $500 per taxpayer rebates distributed in summer 2023.

Senator George Muñoz expressed skepticism about past rebates during recent budget hearings, stating they were "pretty much a waste of money." He suggested better use of funds through investments in trust funds for future needs.

New Mexico remains the second-largest oil producer in the nation after Texas. Oil and gas revenues account for about 35% of the state's total revenue collections. Despite increased spending, lawmakers have allocated millions from the windfall into trust funds for future investment. For example, an early childhood trust fund established with a $300 million appropriation in 2020 now projects a balance of $9.6 billion for the current fiscal year.

The governor's plan also proposes additional funding for existing initiatives: $50 million for a rural hospital fund and $110 million for a matching fund supporting state agencies, cities, counties, and tribal governments to secure federal dollars. Additionally, it allocates $100 million toward expanded behavioral health care programs which may include new mental health and substance abuse facilities.