SANTA FE – Lawmakers and Gov. Susana Martinez will have $272 million available in the coming budget year for spending increases on government programs and to offset any new tax cuts that may be enacted, according to a new financial forecast released Wednesday.
If all the money is added to the state’s budget next year, it will allow for spending increases of 4.8 percent.
Top officials in the Martinez administration outlined the revenue projections to the Legislative Finance Committee during a meeting in Angel Fire. Lawmakers were cautioned that global economic weakness, volatility in oil and natural gas prices and the possibility of federal spending cuts pose “downside risks” to New Mexico’s revenue outlook in the fiscal year starting next July. The state relies heavily on taxes and royalties from energy production.
The state expects economic growth to boost total revenue collections by 4 percent in the 2014 fiscal year to about $5.9 billion. That’s $272 million more than the state will spend this year, and that’s considered the pool of so-called new money available for spending increases on public education and other government programs as well as for covering possible tax cuts.
Lawmakers estimate that several obligations in current law will require $74 million of the money, potentially leaving about $198 million for other budget increases. For example, the state is supposed to increase its payroll contributions into public employee pensions starting next year and lower how much employees pay. In recent years, the state raised worker pension payments and dropped the government’s share to cut spending and help balance the budget.
The revenue outlook for next year is somewhat stronger than when lawmakers developed this year’s budget, which provides for a 4 percent or $219 million spending increase.
The revenue projections are critical, because lawmakers and the governor will rely on them in making budget decisions during the 60-day legislative session that starts in January.
Economists for the Martinez administration and the Legislature prepare the revenue forecast and will update it before the Legislature convenes.