SANTA FE – New Mexico lawmakers will have an estimated $285 million in “new” money to spend in the coming budget year on public schools, prisons and other programs, based on revenue projections released Monday.
Much of the new revenue is projected to come from the oil and gas boom in southeastern New Mexico’s Permian Basin, with more expected to come from state permanent fund investment gains.
During a Legislative Finance Committee meeting in Las Vegas, legislative and executive branch economists told legislators the state is on pace to collect more than $6.4 billion in total revenue during the coming budget year, which begins July 2015. That would represent a $285 million – or 4.6 percent – increase over this year’s spending levels.
“It’s certainly better than it could be and what we dealt with during the recession years” said Sen. Carlos Cisneros, D-Questa, a member of the LFC.
The state revenue growth could allow the state to “fix” some lingering problems, added Cisneros, who listed statewide highway repairs as one possible spending area.
However, Finance and Administration Secretary Tom Clifford, a Gov. Susana Martinez appointee, said the projected revenue growth might not be large enough to allow for state money to be diverted for highway repairs.
He said K-12 public school initiatives, economic development measures and targeted salary increases for hard-to-recruit state jobs would be the priorities in the coming year if Martinez is re-elected to a second four-year term.
The incumbent governor faces Attorney General Gary King, a Democrat, in the general election.
Economists also warned Monday that fluctuating oil and gas prices and a possible reduction in federal funds for special education could eat into the estimated amount of newly available state money.
Oil and gas prices are historically volatile and make up more than $1.1 billion – or nearly 20 percent – of the state’s projected 2016 fiscal year revenue, Clifford said.
In addition, economists noted the state economy is still sluggish in many areas, as state employment levels remain below the pre-recession peak.
Rep. Luciano “Lucky” Varela, D-Santa Fe, the LFC’s chairman, said the spending plan lawmakers ultimately approve might keep some of the newly-available money aside in reserve.
He also said he’s hopeful new jobs will be created in the state, which would boost income tax levels.
Changes to the state’s tax structure, including expanded film tax rebates and a tax break for the manufacturing and construction industries, have been enacted in recent years in hopes of spurring economic activity.
The measures will cost the state an estimated $162.2 million in forgone tax revenue in the coming fiscal year, according to the revenue report released Monday, but Martinez and other proponents remain confident.
“I think in the long run we’re going to see the benefit of those changes,” Clifford said.
In all, state spending has increased for three consecutive years, after an economic downturn led to several years of budget-cutting. This year’s $6.2 billion state budget included the largest across-the-board pay increases for rank-and-file state workers since 2008.
“The good news is sustainable growth has been a success,” Clifford told the Journal , referring to modest budget growth during the recent years.
Other highlights of the revenue report included:
- Cash reserve levels are projected to end the current budget year at $697 million, or roughly 11.3 percent of the state budget.
- Roughly $253 million is expected to be available next year for senior centers, water treatment facilities and other capital outlay projects.
The revenue estimates are typically released twice annually. The next report will be issued in December.