By Trip Jennings

Gov. Michelle Lujan Grisham told business leaders last week state lawmakers will need to return to Santa Fe this fall for a special session to fill holes to New Mexico’s proposed $10.6 billion spending plan created by federal spending cuts.

There are too many unknowns to say with certainty how the state might fare with a cost-cutting Trump administration dreaming of a smaller federal workforce and pared-back programs for the needy and vulnerable.

It’s only been a week since the Republican-controlled U.S. House of Representatives passed a budget resolution that calls for $4.5 trillion in tax cuts and a $2 trillion reduction in federal spending over a decade. But with the federal share of New Mexico’s last 10 state budgets hovering around 40%, or 4 in every 10 dollars, the state is in the federal crosshairs.

One of the places the federal government likely will seek savings is Medicaid, the government’s health care insurance program for the low-income. Currently, the federal government pays roughly $3 for every $1 New Mexico spends to pay for its program. That’s because New Mexico is one of the poorest states in the nation, and receives a higher share in federal dollars than other wealthier states.

Gov. Michelle Lujan Grisham told CBS News last week that deep cuts to Medicaid would leave hundreds of thousands of New Mexicans either under- or uninsured.

To put that into context, a 12 percent to 13 percent cut in federal Medicaid dollars to New Mexico “would amount to more than $1.1 billion,” according to a presentation staff at the legislature’s budget arm, the Legislative Finance Committee, gave to lawmakers Monday in Santa Fe.

There are other programs New Mexicans rely on that could suffer cuts. Should Congress seek to save money in its free school lunch program, New Mexico might need to make up the difference because current New Mexico law requires “the state to provide funding for universal free meals.” Making up the difference could cost tens of millions of dollars, the LFC report said.

In addition to federal programs that could shrink in size, there is the Trump administration’s desire to reduce the federal workforce.

The LFC estimated New Mexico had around 29,500 direct federal government jobs in New Mexico in December 2024. Add in another 32,000 positions at the two national labs in Los Alamos and Albuquerque.

“New Mexico has the 6th highest concentration of federal employment in the country,” reads a slide in the LFC presentation. “Several NM counties have among the highest concentrations of federal employment nationally.”

New Mexico is also vulnerable to the financial consequences of tariffs the Trump administration wants to slap Mexican and Canadian imports.

“The state imported $2.5 billion from Mexico in 2023, alongside $3.61 billion of imports from China, Canada, and India,” the report reads.

Should those countries slap tariffs on American goods in response, New Mexico could feel economic pain, according to the LFC. “New Mexico exported $4.9 billion in goods globally in 2023, with $3.4 billion (70%) going to Mexico.”

Helen Gaussoin of the LFC on Monday stressed the report to state lawmakers was a “high-level broad look at possibilities” and it is too early to know what exactly will happen in the coming months.

Whatever happens, it is a safe bet New Mexico will feel economic pain in the coming months and years.

Trip Jennings started his career in Georgia at his hometown newspaper, The Augusta Chronicle, before working at newspapers in California, Florida and Connecticut where he reported on many stories, including the resignation and incarceration of Connecticut’s then-governor, John Rowland, and gang warfare in California. Since 2005, Trip has covered politics and state government for the Albuquerque Journal, The New Mexico Independent and the Santa Fe New Mexican. He holds a Master’s of Divinity from Columbia Theological Seminary in Decatur, Ga. In 2012, he co-founded New Mexico In Depth, a nonpartisan, nonprofit media outlet that produces investigative, data-rich stories with an eye on solutions that can be a catalyst for change.