SANTA FE (AP) — New Mexico’s financial outlook is weakening and there will be less money available for government programs and services in the upcoming budget year than previously expected, lawmakers were told today.
Underscoring the economic uncertainty facing the state and nation, a new revenue forecast outlined to lawmakers lowered projections for tax collections by about $21.5 million in the current budget year and $123 million in the fiscal year that starts next July.
Much of the decline is because economists expect oil and natural gas prices to be lower than anticipated. New Mexico collects taxes and royalties on oil and gas production, and those revenues fluctuate with prices. Projections for sales tax revenues also were lowered from a forecast delivered to legislators in July.
Top budget and tax officials in Gov. Susana Martinez’s administration outlined the latest revenue estimates to the Legislative Finance Committee, which will make budget recommendations that serve as a foundation for spending proposals by lawmakers next year.
According to the revenue forecast:
— The state should collect nearly $5.7 billion in its main budget account in the next fiscal year. That will mean about $246 million in “new money” to allocate for programs and services when the Legislature meets in January to start work on the 2013 budget. That pool of money represents the difference between projected revenues and current spending. However, administration officials said lawmakers will actually have less than $200 million available for next year’s budget because the state will have to spend about $50 million more on public employee pensions.
— Revenues in the current budget year, which runs through June 2012, will be about $21.5 million lower than expected. If that figure holds, New Mexico would end the fiscal year with cash reserves of $564 million, which is the equivalent of about 10 percent of state spending. However, lawmakers were told the state reserves will end up lower because about $100 million is needed to plug a shortfall for Medicaid, which pays for health care for the poor and uninsured children. If Medicaid gets the extra money, the state will have end-of-year reserves of about 8.5 percent. Traditionally, lawmakers and the administration consider it financially prudent to maintain reserves from 5 percent to 10 percent.
— Revenues in the just-completed 2011 fiscal year are up $113 million because of higher-than-expected income, sales and energy-related tax collections.