SANTA FE – Incoming revenue for New Mexico’s just-completed budget year could end up being at least $30 million less than estimated, the finance chief for Gov. Susana Martinez said Tuesday.
A dip in oil prices and lower-than-expected tax collections in several key areas have contributed to the revenue slowdown, said Department of Finance and Administration Secretary Tom Clifford.
However, Clifford said the state is in good financial position to absorb the possible budget hit, with more than $600 million in projected cash reserves.
“I think the key is we have been able to be restrained in our spending,” he told the Journal. “That has helped us withstand a decrease in our-year to-year revenues.”
New Mexico state government took in nearly $113 million less during the first 11 months of fiscal 2013 than it did in the same period the previous year, according to DFA. Final revenue figures will be available later this month.
A December 2012 revenue forecast pegged projected state revenue at about $5.7 billion for fiscal 2013, which ended June 30.
Incoming revenue levels were lagging behind that forecast by about $34 million as of the end of May, Clifford said Tuesday.
Sen. Carlos Cisneros, D-Questa, vice chairman of the Senate Finance Committee, said the revenue volatility is a sign of the state’s uneven recovery from a severe economic downturn.
“Unfortunately, the recovery is so gradual and slow we’re not seeing much in terms of growth,” Cisneros said. “We’re going to have to dip into our bank account to survive between now and January.”
The current budget year is shaping up to be better economically, and New Mexico is not in danger of slipping back into a recession, Cisneros added.
Revenue levels have been tough to predict in recent years.
During fiscal 2012, robust oil prices and production – mostly in the state’s southeastern region – propelled the state to take in roughly $250 million more than had been previously estimated.
That surplus boosted the state’s cash reserves to about $750 million, or more than 13 percent of recurring General Fund spending. The Martinez administration has sought to keep at least a 10 percent reserve level.
Meanwhile, the New Mexico State Investment Council reported Tuesday that the value of the state’s permanent funds grew by more than $1.7 billion – to a total of nearly $17.1 billion – during the just-completed fiscal year.
The investment gains represent a 13.3 percent increase for the largest of the funds, placing the state among the top one-third of similar-sized public funds in terms of growth, according to the SIC.
Annual distributions from the permanents funds go into the state’s general fund, where they help to pay for public schools, hospitals and other expenses. About $746 million was distributed during the 2013 budget year.