8-25-2023 8:39am

State Budget Surplus Growing to Nearly $3.5 Billion

Chris Edwards Editor

The state of New Mexico is flush in a projected budget surplus of nearly $3.5 Billion due to better than anticipated economic growth, higher than estimated employment rates, and the state’s oil and gas industry. State officials in New Mexico recently increased its estimate for how much money it’ll have available in state budget collections.

Under the revised forecast exceeding that of the December 2022 forecast; New Mexico’s economists estimates the state will earn from taxes and investments than originally projected. Now, a new estimate shows another $866.2 million that they under projected for the fiscal year 2023 and $790.7 million they underestimated for the fiscal year 2024 adding to the total existing budget surplus.

With all the flush budget surpluses , lawmakers seem to be staying fiscally conservative, knowing that the good times may not continue forever.

“We need to see past the dollar signs and focus on planning for the future because these high-revenue years won’t last,” New Mexico Senator George Muñoz (D-Gallup) said in a press release. “We still have much work to do for New Mexicans, but we have an opportunity as well to move the state budget toward less reliance on oil and gas.”

Of this issue New Mexico’s Republicans seem to agree with Democrat Munoz. Republican Senator Bill Sharer (Farmington) said the state needs to invest the extra cash.

“We don’t want to squander $3.5 billion when we can use it for investments that will allow us to weather economic downtowns. The question is, where do you put the money where it grows? New Mexico certainly has issues it needs to address but the focus should be how to take today’s money and turn it into future money,”Sharer said in a statement to KRQE News when asked about the surplus.

A question surrounding the surplus mis whether or not lawmakers and New Mexico Governor Michelle Lujan Grisham, is willing to consider another round of rebates and or payouts to New Mexicos taxpayers. Over the last fiscal year of 2023, the state paid residents more than $780 million in rebates. When asked about the possibility of another round of rebate checks, the governor’s office responded to KQRE New. with this statement:

“The robust general fund proves that what we are doing in New Mexico’s economy is working,”Gov. Michelle Lujan Grisham said. “As we see another record year of projected revenue, we will continue building a solid financial future for our state through meaningful and long-lasting investments, always with an eye on stewardship of public dollars and fiscal responsibility.”

According to the National Association of State Budget Officers (NASBO), New Mexico’s total expenditures in fiscal year (FY) 2022 were $23.2 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2022 were $2.9 trillion, ranging from $5.6 billion in Wyoming to $510.0 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, New Mexico’s combined state and local direct general expenditures were $26.5 billion in FY 2021 (the most recent year census data were available), or $12,495 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $11,087.

The major industries that contributed the most to New Mexico’s gross domestic product (GDP) in 2022 were government, finance, professional services, mining, and social services (i.e. health and education). Government primarily military and military research, Department of Energy and Defense programs, mining and oil, contributed more to New Mexico’s GDP than they did to the nation’s and region’s GDP, while finance and professional services were less important to New Mexico than they were to the nation and region in 2022.

Looking at more specific industries, among those that accounted for at least one percent of New Mexico’s GDP in 2021, the federal government produced far more revenue for the state than for the nation, contributing 7.7 percent to New Mexico’s GDP and 2.3 percent to the nation’s. Other industries that overperformed in New Mexico relative to national averages in 2021 were oil and gas extraction; state and local government; the military; and miscellaneous professional, scientific, and technical services.