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New Mexico’s tax revenues are rising rapidly, the state’s economy is expanding and diversifying, and we have made important progress in protecting the long-term stability of our state budget. That’s a far cry from the nearly half-billion-dollar budget deficit I inherited when I took office in 2011.
In short, New Mexico’s fiscal house is in good order.
State tax revenues rose by more than 16 percent – $560 million – through the first eight months of the current fiscal year.
As a result, we have replenished our reserves – holding over 10 percent of our $6.3 billion state budget as savings – and have a strong credit rating. A year ahead of expectations, we will also divert in excess of $20 million in oil and gas revenues to our new stabilization fund that was created in 2017 to help New Mexico guard against future downturns in the energy markets or the national economy.
Our economic outlook is also positive. New Mexico’s unemployment rate is the lowest it’s been in a decade, down 2.5 percent since 2011. And we’ve added nearly 9,000 jobs in the past 12 months – all in the private sector.
These are important feats, especially given that they were achieved without ever raising taxes and despite the tremendous headwinds that have battered New Mexico over the past decade, threatening our budget stability and economic growth.
When I took office, our state faced a $450 million budget deficit. New Mexico was then hit hard by federal budget cuts, leading to a loss of federal government jobs and private sector employment tied to federal spending. Washington politicians even shut down the federal government at one point. And, just a few years ago, New Mexico was one of a handful of states to feel the full brunt of the steepest oil and gas crash in history, which dried up state revenues and eliminated over 10,000 energy-sector jobs.
This steady drumbeat of economic adversity, much of it out of our control, has nonetheless been our responsibility to handle.
We’ve held the line on spending each year, setting the tone from the start that excess wouldn’t be tolerated. We sold five state planes, reduced the number of political appointees and capped Cabinet secretary salaries. State agencies have routinely proposed flat budgets, and over the past 8 years, I vetoed $80 million in excessive spending and over $55 million in wasteful pork projects.
When revenues increased, we better targeted and prioritized spending toward things like improving public safety, public education and providing a safety net for those most in need. Education spending is at an all-time high, and starting teacher salaries are up 20 percent. We’ve dramatically expanded child care services, pre-K programs and summer tutoring for New Mexico kids, and more money is going into the classroom than ever before.
Additionally, we refused to raise taxes on New Mexico’s families and businesses. Raising taxes makes a state less predictable for business investment, and all too often it simply sets up a windfall for government excess when better times return. This is why I vetoed the $350 million tax increase passed by the Legislature last year. Instead, through sound fiscal management, we turned a projected deficit into a surplus – again, without raising taxes.
Finally, even during hard fiscal times, we invested in job-creation programs, cut taxes and fees 57 times, and reformed the state’s tax code. Why? I believe our long-term economic success as a state and the long-term stability of our state budget is entirely dependent upon our commitment to diversifying our economy. As a result of this strategy, we’re landing cutting-edge companies like Facebook, which will have 1,000 workers doing on-site construction until 2023. Despite a 12 percent drop in federal government employment since 2011, our economic growth has been ranked as high as seventh in the nation over the past year, driven by private sector growth.
The road to economic diversification is a long one, but real progress is being made. And, as we look back on the fiscal storms we’ve weathered together, we should take pride that our budget is stable and our fiscal outlook is strong and getting stronger.