State Senators Stewart discusses the Clean Fuel Standard Act during debate on the Senate floor during the annual legislative session on Thursday, March 11, 2021, in Santa Fe, N.M. The bill, which would create financial incentives to reduce fuel emissions, passed the state Senate 25-14. (AP Photo/Cedar Attanasio)

SANTA FE, N.M. (AP) — Lead state budget negotiators are rewriting spending plans to quickly tap federal pandemic relief money and shore up unemployment insurance, student financial aid, Medicaid insurance, teacher pensions and select state agency budgets.

The Senate budget committee on Monday put the finishing touches on proposed amendment to a spending plan for the coming fiscal year that starts on July 1. The amended plan would increase general fund spending by 4.8% over current annual spending obligations to $7.45 billion, a $373 million increase.

The panel plans to vote Monday or Tuesday on budget amendments that funnel $600 million in federal relief toward the state's indebted unemployment fund — relieving businesses of future payroll tax obligations.

“That is really important for small businesses,” said Democratic Sen. George Muñoz of Gallup, chairman of the committee."

New Mexico state government expects to receive $1.63 billion directly from the landmark $1.9 trillion COVID-19 relief bill approved by congressional Democrats and President Joe Biden.

The committee's endorsement would send the budget bill to the Senate floor for a decisive legislative vote. The bill addresses most spending priorities outlined by Gov. Michelle Lujan Grisham, who can veto any portion or the bill.

Proposed Senate budget amendments would boost student financial aid programs, including the governor's signature tuition-free college program for in-state students, by $21.5 million.

Another $50 million in federal relief would cover state Medicaid obligations as enrollment surges in the federally subsidized health insurance program for the poor.

Another proposed committee amendment funnels about $32 million toward a 1% increase in retirement contributions for educators and K-12 school staff. That sweetens the taxpayer contributions for teacher retirements to 15.2% of salary in efforts to pay down multi-billion unfunded pension obligations.

The proposed changes boosts spending at the state Environment Department and staves off House-proposed spending cuts at the Aging and Long=Term Services Department and the state's cultural affairs agency that stopped collecting museum admissions fees for nearly a year amid public health order closures.

The amended bill would provide a 1.5% pay increase for state agency and K-12 school employees.

State reserves would hold steady about $1.8 billion — or nearly 24% of current annual spending commitments.

The state used $1 billion in reserves to prop up general fund spending during the current fiscal year. State income forecasts have rebounded on surging oil production and market prices for petroleum.