SANTA FE — About $285 million should be available in the next budget year for spending increases on state government programs, public education and to offset potential tax cuts, according to a new revenue forecast released Monday.
If the Legislature and governor agree to put all $285 million into programs and services, that would allow a 4.6 percent increase in spending in the 2016 fiscal year, which begins next July and runs through June 2016.
Top officials in Gov. Susana Martinez’s administration outlined the revenue projections to the Legislative Finance Committee during a meeting in Las Vegas.
The latest financial forecast will shape the debate over spending in next year’s state budget. The committee and the administration will use the figures in the next few months to develop their budget recommendations for the Legislature, which convenes in January for a 60-day session.
Economic growth — particularly from strong oil production — is expected to boost total revenue collections next year to about $6.4 billion. That’s $285 million more than the state plans to spend this year and that amount — viewed as “new money” by legislators — is what’s available for budget increases next year.
The revenue outlook for next year is about the same as when lawmakers developed this year’s budget, which provides for a 4.6 percent spending increase.
Lawmakers were cautioned that volatility in oil and natural gas prices poses a “downside risk” to the state’s revenue forecast. A $1 change in oil prices causes a $6 million change in revenue for the state’s main budget account, according to Finance and Administration Secretary Tom Clifford.
The state relies heavily on taxes and royalties from energy production, with a little over $1.1 billion in revenue coming from oil and gas last year. The state peaked at $1.2 billion from energy taxes in the 2008 budget, according to Clifford. The largest amount of revenue — about $2.2 billion — comes from gross receipts and compensating taxes on goods and services.
Economists for the Martinez administration and the Legislature prepared the revenue forecast and will update it later this year before the Legislature convenes. According to the latest report:
— The state received $146 million more than expected in the 2014 budget year, which ended in June. That helps to replenish the state’s cash reserves, which the Department of Finance and Administration said are equal to about 10 percent of state spending or $579 million.
— Revenue should be $56 million higher than expected in the current 2015 budget year, which started in July. That also can help boost reserves but some of the money could be used for one-time spending projects, such as capital improvements, or to supplement this year’s budget for some programs. The better-than-anticipated revenue this year and last year largely stems from oil and gas production.
— About $253 million should be available to finance capital improvement projects from bonds backed by severance taxes on energy production.