It’s like a breath of fresh, smoke-free air: State revenue is growing more than expected, and the Legislature’s budget leaders are hopeful it signals recovery.
The latest monthly report from the Legislative Finance Committee indicates New Mexico collected 8 percent more in the first 10 months of the budget year that ended June 30 than it did in the comparable period the previous budget year.
Budget forecasters had anticipated that growth would be 6.8 percent.
“It could be better, but it’s good,” said LFC Vice Chairman Rep. Luciano “Lucky” Varela, D-Santa Fe. “It looks like there’s a recovery occurring.”
The July 1 report was for collections through April. Final figures for the full 2010-11 budget year won’t be available for at least a couple of months.
As of the end of April, the state was on track to take in a projected $87 million more in the just-ended budget year than was forecast – although depending on the final numbers from May and June, that could range from $70 million to $100 million.
“I’m hoping that we can look at it three months down the road and say, ‘Yes, it’s a trend,’ ” said LFC Chairman Sen. John Arthur Smith, D-Deming.
Overall, the state is projected to take in more than $5 billion for the 2010-11 budget year.
The additional revenue goes into the state’s cash reserves, which are now being tapped to pay emergency costs related to the wildfires raging across New Mexico.
As of Tuesday, about $22 million had been committed to firefighting efforts in this budget year, putting the level of reserves at about $264 million, according to Scott Darnell, a spokesman for Gov. Susana Martinez.
The federal government will reimburse the state for much of that spending, but it’s a complex process and it will take a while to sort out just how much, Darnell said.
The federal government picks up all costs of firefighting on federal and Indian lands. Additionally, the federal government, through FEMA grants, will pick up 75 percent of firefighting costs on nonfederal lands for the state’s six largest fires – including, for example, the Track Fire near Raton and the Donaldson Complex Fire east of Ruidoso.
According to the July 1 LFC report, the biggest chunk of the surplus collections is from the gross receipts tax, which would account for about $57 million of the projected $87 million.
“Retail sales are up, and what it tells me is that people are not quite as fearful as they were to spend. … I believe that people are beginning to loosen up a little bit,” Smith said.
Varela said he was hopeful the increasing revenues would mean that some of the higher contributions by state employees to their pension plans, which were key to balancing this year’s budget, could be ended after the current 2011-12 budget year.
Under the law, a 1.75 percent additional contribution from most employees this year would be extended for a second year unless revenues were $100 million more than forecast for 2011-12 and cash reserves remained at 5 percent.
“It seems to be headed in that direction,” Varela said. “We’re trying to be optimistic.”
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