State agencies dip into savings from job vacancies to hand out 'significant salary increases'

Sep. 18—Money saved through job vacancies in New Mexico state government is projected to be lower than in previous years as agencies fill more positions and hand out hefty raises to existing employees.

"We've seen a major shift this last year in agency operating budgets giving out significant salary increases to staff that are sopping up a lot of vacancy savings," Legislative Finance Committee Director Charles Sallee told lawmakers this week.

"You'll see that as a theme throughout the fall, so that may have decreased some of the recurring reversions that we're seeing," he said, referring to money sent back to the general fund, "but definitely outsized raises beyond what you appropriated for."

The significant salary increases, which touch all three branches of state government and include the Legislative Finance Committee, might mean some agencies will have to increase their personnel budgets to cover the costs.

Dylan Lange, director of the State Personnel Office, said the increases are necessary to recruit and retain workers.

Agencies have adjusted employees' salaries over the last few years to provide competitive compensation and help the workforce offset steep cost-of-living increases, Lange said in a statement Wednesday.

A compensation study released in May found state salaries are competitive but not excessive based on a national data comparison, he said.

"The State of New Mexico is 4.7% below general industry market for pay currently," Lange said in the statement. "If our state hopes to retain its government workforce while recruiting and enticing future generations into public service, we must start to dclose this gap."

He added, "State employees in the classified service are still paid on average at the midpoint of their pay range."

Helen Gaussoin, a spokesperson for the Legislative Finance Committee, said in a statement the agency is seeing the trend of lower vacancy savings while reviewing data in preparation for the development of the budget for fiscal year 2026.

A couple of factors are at play, she said.

"First, the state has more employees — about 750 more in September 2024 than in September 2023. Secondly, some agencies have given some employees larger-than-expected pay increases," Gaussoin said.

For fiscal year 2024, the Legislature approved 6% pay increases.

"But the average increase for the roughly 15,000 state employees who remained in the same job throughout the fiscal year was 9.7%," she said.

"We are even seeing some areas of state government that might need increases in the personnel category just to meet current levels of staffing at their current rates," Gaussoin said.

The Legislative Finance Committee, the fiscal and management arm of the Legislature, has data showing some agencies are spending more than budgeted for personnel, but Gaussoin emphasized the information is preliminary and based on personnel counts from a single point in time.

"We aren't pointing fingers," she said. "We are very, very early in the budget development process and we might find something that raises concerns, but at this point, we are merely noting for [lawmakers on the Legislative Finance Committee] that personnel is costing more than we expected."

Gaussoin said the state has about two dozen agencies that appear to have "negative" vacancy savings, though the number could change after a deeper dive into the data.

"When an agency has positive vacancy savings, [Legislative Finance Committee] staff might propose a smaller increase for personnel than requested by the agency (or no increase), with the assumption the agency can cover some of the cost with the savings," she said. "Agencies with negative vacancy savings might need a personnel increase to maintain the status quo."

Follow Daniel J. Chacón on Twitter @danieljchacon.