New Mexico’s unemployment rate of 6.6 percent is the second highest in the nation, behind Alaska, and the state’s overall economic output shrank during the fiscal year ending in June 2016.
[auth] The state’s Democrat-led Senate and Republican governor are searching for ways to expand and diversify the economy, with little money at their disposal for new initiatives amid a budget crisis linked to downturn in the oil and natural gas sectors. The first nine days of the legislative session were consumed by efforts to fix a current-year budget deficit and increase depleted reserves, with a $216 million solvency plan awaiting a decision by Gov. Susana Martinez.
“The first order of business now is to pass legislation to spur more employment and economic activity in New Mexico,” said Democratic Sen. Clemente Sanchez, of Grants, expressing concern that young, educated people are fleeing the state in search of jobs.
Democrats want to funnel a greater share of state incentives toward expanding local New Mexico-based businesses through two programs that offset jobs training costs and infrastructure investments.
Sanchez said Democrats also want to direct $63 million in capital outlay toward projects that increase employment. The allocation for construction projects for the fiscal year starting in July is the smallest in many years. Republican lawmakers have suggested redirecting that money to boost general fund reserves and avoid some spending cuts. Increasing investments in broadband infrastructure also will be a Democratic priority, though Sanchez provided few details on financing.
House and Senate Democrats are backing several bills that would increase the statewide minimum wage from the current rate of $7.50 an hour. Higher minimum wages already are in effect in Santa Fe, Las Cruces and the Albuquerque area. One new bill would boost base pay to least $10.10 an hour by 2020, with further increases indexed to inflation.
Majority House Speaker Brian Egolf declined to provide a detailed estimate for employment growth under the new initiatives, predicting only that they would create “lots” of jobs if approved.
He acknowledged major economic uncertainties tied to shifting federal priorities set by President Donald Trump, but said the Legislature may have little time to react during the current 60-day legislative session.
New Mexico state government depends heavily on federal matching funds to provide Medicaid health care coverage to low-income and disabled residents. Nearly 15 percent of New Mexico’s 2.1 million residents have enrolled in Medicaid since 2014, with costs paid almost entirely by the federal government.