ALBUQUERQUE, N.M. — Experts for administration, governor are separated by $65 million
SANTA FE — Legislative economists and budget experts in Gov. Bill Richardson’s administration are $65 million apart in their tracking of incoming state revenue.
The disagreement, which was presented to members of a key legislative budget panel on Thursday, underscores the volatility of New Mexico’s economy as the state seeks to pull itself out of a budget crunch that has triggered sweeping cuts and tax increases.
It also highlights ongoing tension between top lawmakers and Richardson’s administration on budgetary issues.
Through the first eight months of the budget year — which ends June 30 — state Taxation and Revenue Department officials pegged incoming revenue to be nearly $17 million above forecast levels, due in large part to higher-than-expected royalties from oil and natural gas production.
However, Legislative Finance Committee economists believe state revenues were more than $48 million below where they should have been through February to keep pace with the forecast revenue figure of $4.8 billion for this year.
The two agencies agreed on the $4.8 billion figure before the Legislature voted on spending levels in this year’s budget.
Taxation and Revenue Secretary Rick Homans, appearing before the LFC on Thursday, cited an increase in the number of construction permits in the Albuquerque area as a sign of economic rebound.
“There does seem to be a consensus at this point that we have hit the bottom and we are moving up,” Homans said.
However, Sen. John Arthur Smith, D-Deming, chairman of the Senate Finance Committee, said there’s still ample reason for concern.
“The administration has always planned for the best, and I’ve always expected a little less,” Smith said.
The revenue issue could be significant if the state ends the fiscal year with less money on hand than predicted.
In that case, the Department of Finance and Administration would have to use the state’s already-depleted cash reserves to plug the gap between expenditures and revenue.
The biggest source of disagreement between the executive and legislative economists is personal income tax, which makes up about 20 percent of state revenues.
While Homans described the disagreement over revenue levels as “reasonable variations,” the $65 million figure represents more than 1 percent of the state budget.
Meanwhile, Smith and other LFC members cited the need to replenish cash reserves and make up for the loss of federal stimulus funds — which helped buttress the state budget in the past two years — as pressing challenges facing lawmakers even if the economy improves.
“We’ve still got some challenging times before us,” said Rep. Donald Bratton, R-Hobbs. “I’m not sure we’ve solved the budget crisis yet.”