SANTA FE – The amount of money projected to be available for state spending in the coming budget year held steady Monday under revised revenue estimates, but legislative economists raised concerns that the projections might be overly optimistic.
According to the revenue projections, legislators will have an estimated $283 million in “new” money to spend during the fiscal year that begins in July. New money is in excess of this year’s $5.6 billion spending level.
In deviating from the official projections, however, legislative branch economists said they will use a slightly lower figure – about $259 million in new money – in their budget tracking and planning.
Legislative Finance Committee Director David Abbey told lawmakers the rift was “awkward,” because executive and legislative economists work together to come up with revenue estimates.
The escalating price tag of several state tax breaks was cited as a primary reason for the fiscal concerns.
The rising cost of those tax breaks could offset positive tax revenue trends, such as Gov. Susana Martinez’s decision to expand the state’s Medicaid program to additional 170,000 New Mexicans, according to the Legislative Finance Committee.
In an LFC memo released Monday, the estimated cost of four specific tax incentives during the coming fiscal year jumped to $162 million. It had been $106.6 million in December 2012. The four incentives are a tax break for businesses with high-wage jobs, a recently approved exemption for the construction and manufacturing industries, the state’s film rebate program and a tax credit for building new energy-producing facilities.
Concern over the tax breaks’ cost prompted lawmakers to voice frustration and suggest new state spending will have to be limited.
“There’s a basic deficiency here that we can’t get a good read,” said Senate Finance Committee Chairman John Arthur Smith, D-Deming.
Legislators have already enacted an annual cap on film rebate spending, and bills that would limit other tax credits have been introduced this year at the Roundhouse. Such changes could not be applied retroactively, however.
Meanwhile, Martinez told reporters Monday that any changes in the state’s revenue forecast would not have a major impact on her economic agenda, which includes a proposal to cut the state’s corporate income tax rate.
“We have to make sure revenues continue to come in, but that we are smart about how we use those additional revenues,” Martinez said. “Providing small businesses an even playing field is extremely important.”
— This article appeared on page A3 of the Albuquerque Journal