As cuts to New Mexico’s federal funding loom, legislators in Santa Fe are positioning the state to fill potential gaps with ample reserves and new savings accounts.

Ahead of President Trump taking office, Democratic Gov. Michelle Lujan Grisham told KUNM that she felt New Mexico’s laws were in good shape to guard against his agenda. She said her eye was on a different vulnerability.

“It’s the money,” she said. “IRA [Inflation Reduction Act], public education, climate change investments, the infrastructure law, Medicaid — those are the things that can really interrupt a state like ours’ progress and protections.”

As House Democrats unveiled their proposed state budget this week, sponsor Rep. Nathan Small said it is the more than $3 billion left in reserves that will protect the state against a potential decline in federal funding.

“That’s our first line of defense to make sure that New Mexico is the best prepared financially, particularly when it comes to federal chaos,” he said at a news conference Monday.

Small said the House Appropriations and Finance Committee, which he chairs, took a “cautious” approach and chose not to allocate general fund dollars to areas where federal rollbacks are simply anticipated at this point.

“We’re focused on delivering now under the rules and the laws that exist now,” he said.

Lujan Grisham had also said in the fall that the state should be prepared for cuts to the Federal Emergency Management Agency (FEMA).

“So, I’m certainly going to work with legislators to make sure that we create funds that shore up our ability to protect our citizens, to rebuild after natural disasters,” she told KUNM.

While FEMA’s budget has yet to be slashed, more than 200 of its employees have been fired as part of the Trump administration’s effort to downsize the government. The President has also created a council to review and overhaul the agency.

New Mexico Senator and Finance Committee Chair George Muñoz (D-Gallup) has introduced a bill that would create a $100 million state natural disaster fund. It could provide no-interest loans to residents who qualify for FEMA assistance. The bill does not assume a reduced FEMA budget, but could act as a bridge for disaster victims awaiting reimbursement.