I. Special Legislative Session: Status and Implications
Please find below and up pertaining to the potential of a special legislative session and recent updates to the legislature on federal spending reductions.
I. Special Legislative Session: Status and Implications
Governor Lujan Grisham is considering calling a special legislative session in late August or early September 2025. Although a final decision has not been announced, there are clear signs that the administration is preparing for such a possibility. However, significant political uncertainty remains—both regarding whether the session will proceed and whether it would yield any substantive outcomes.
The Governor has identified two key priorities for the session:
Addressing Anticipated Federal Cuts to Medicaid and SNAP
These reductions stem from the recently enacted One Big Beautiful Bill Act (OBBA) and, while they are not scheduled to take effect until after the November 2026 elections, their long-term impact on the state’s healthcare and social safety net could be profound. New Mexico currently enjoys strong oil and gas revenues and has the capacity to temporarily backfill shortfalls using regular-session appropriations or reserves from the state’s “Rainy Day” funds. However, these are short-term solutions to what is expected to be a sustained funding gap. The newly created $50 billion federal Rural Health Care Fund may offer limited relief for rural areas, but its accessibility and practical effectiveness remain in question.
Reintroduction of ICE Detention Center Ban
The Governor also seeks to revive legislation that would prohibit ICE detention facilities in New Mexico. While the measure nearly passed during the 2025 regular session, it has since faced renewed opposition and many legislators believe the issue is best handled at the federal level, where members of New Mexico’s congressional delegation are already active.
It is also possible that additional items, such as juvenile crime legislation and broader criminal justice reforms, may be added to the session agenda. However, no formal call or legislative language has been released to date. It is worth recalling that the last special session, held in July 2024, adjourned in less than a day after failing to produce any legislative outcomes. That session was broadly viewed as unsuccessful due to the lack of pre-session agreements between the executive and legislative branches, dynamic that appears to be repeating itself. Without such agreements in place, the Governor again risks convening a session that yields little result.
For subcontractors and the broader construction industry, while the session’s stated topics may not directly involve infrastructure or procurement policy, the broader fiscal implications are significant. Any shifts in state spending priorities, particularly in the context of reduced federal funding, could influence capital outlay decisions, public works projects, and available workforce development resources.
II. FFSS Meeting – August 1, 2025
Location: Taos Ski Valley
Focus Areas: Federal Education Funding, Medicaid Services, SEG, SNAP
The Legislative Federal Funding Stabilization Subcommittee (FFSS) convened on August 1 to review the financial risks New Mexico faces due to federal funding changes—particularly those associated with the
OBBA legislation. While the session primarily focused on K–12 education, the findings underscore broader risks to state funding streams that impact multiple sectors, including healthcare, workforce development, and infrastructure.
Key Updates from the Meeting
Federal Reductions Linked to OBBA
- $306.6M at risk for At-Risk SEG (State Equalization Guarantee) distributions
- $96.1M in jeopardy for Medicaid-funded school-based services (nursing, therapy, behavioral health)
- $163.1M in SNAP-based school nutrition (meals/snacks)
- $153.4M at risk in Title I-A support for low-income students
Temporary Withholding of Federal ESEA Grants
- On June 30, the U.S. Department of Education (USED) froze $44.8M in FY25 ESEA Title funds (I-C, II-A, III-A, IV-A/B) over compliance issues.
- Although funds were released on July 25, the freeze caused disruption to ~176 LEA positions and affected district-level planning across the state.
Additional Programmatic Losses
- $6M rescinded for mental health services in Silver Schools
- $65M five-year grant revoked from the Central Region Educational Cooperative
- $8M teacher residency innovation grant canceled mid-cycle
- $12M/year Comprehensive Literacy Grant facing declining district participation
- $4.7M in special education professional development funds unreleased
Administrative and Policy Challenges
- Delays in ESSER and Title fund reimbursements
- New, abrupt federal recertification requirements
- Federal guidance now limits eligibility of “non-qualified aliens” for Head Start, adult education, and dual credit programs
The potential for a special legislative session, combined with mounting pressure from federal funding reductions, sets the stage for a critical period in New Mexico’s policymaking environment. While subcontractors are not directly implicated in the current session’s proposed topics, the broader budgetary and political consequences could influence infrastructure funding, public construction contracts, and workforce initiatives. We will continue to monitor developments closely and provide timely updates as the situation evolves.
Please don’t hesitate to reach out with any questions or concerns.
Thank you, and all the best to you and yours.
John Thompson ASA-NM Lobbyist and the Government Advocacy Committee