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SANTA FE, N.M. (AP) — New Mexico's state workers and educators are in line for their first across-the-board pay increase in four years under a nearly $5.9 billion state budget signed into law Friday by Gov. Susana Martinez.
The governor used her line-item veto powers to trim less than $2 million from next year's spending in the budget, but she left intact provisions that allocate about $33 million for 1 percent salary increases for public employees, including school workers, in the fiscal year that starts July 1.
Martinez faced a Friday deadline for signings and vetoing bills passed by the Legislature.
Also signed by the governor were measures to:
— Revamp the pension system for nearly 90,000 state and local government workers and retirees. Cost-of-living adjustments will be lowered, and some workers will be required to contribute more to improve the long-term finances of the retirement fund, which has a more than $6 billion gap between its assets and the projected benefits to be paid in the future.
— Allocate $218 million in bond proceeds for capital improvements across the state. Martinez trimmed about $4 million worth of projects with line-item vetoes, which is far less than the $23 million cut last year.
— Temporarily shore up a lottery-financed college scholarship program that is running out of money. To help avert possible cuts in financial aid to New Mexico students next year, the program will get part of the money — about $10 million — that the state receives from a national settlement with tobacco companies. Martinez vetoed a provision that would have shifted $50 million from the state's cash reserves to help replenish the tobacco settlement permanent fund. The governor urged lawmakers to find a permanent solution to the college scholarship program's financial problems that doesn't require a new source of money.
The budget, as signed, provides for a 4.2 percent increase in spending in the next fiscal year rather than 4.4 percent as approved by the Legislature.
Nearly $2.6 billion is allocated for public education, which is a 4.6 percent or $112 million increase over this year. Public schools account for the largest share of the state budget.
The governor complained that lawmakers had shortchanged several of her economic development and education initiatives, but said the "fundamentals of this budget are strong."
"It restrains state spending to a responsible level and ensures that we have strong reserves during uncertain times," Martinez said in a statement.
Lawmakers didn't fund a merit pay proposal for teachers that Martinez had proposed. The budget earmarks $2 million for stipends for teachers who agree to work in schools in high poverty areas with low student performance. Martinez had requested $11 million for pay incentives for high-performing teachers.
The governor vetoed nearly $21 million in one-time spending in the budget, including $20 million for a college endowment fund. The governor said that was too much of an increase, particularly when the state needed to maintain hefty cash reserves as a financial safety net because of looming federal spending cuts.
Under the pension changes, annual cost-of-living adjustments for retirement benefits will be lowered to 2 percent from 3 percent for most retirees. Those currently start two years after retirement, but the new law will phase in a seven-year waiting period for the inflation adjustments.
Cost-of-living adjustments of 2.5 percent will be provided for some retirees, including those who retired after working 25 years and those who are disabled.
New retirement provisions will apply to employees hired on or after July 1, 2013, including requiring them to work longer before collecting pension benefits.