Home New mexico tax Oil and Gas Revenue Will Fuel New Mexico’s Next Fiscal Windfall | Economic news

Oil and Gas Revenue Will Fuel New Mexico’s Next Fiscal Windfall | Economic news

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CHAMA, NM (AP) — Projected revenue for the next fiscal year should bring another boon to New Mexico’s coffers.

New estimates released Wednesday by legislative and executive economists at a meeting of the Legislative Finance Committee in Chama show lawmakers will have $2.5 billion in new money. It is the difference between current spending levels and expected revenues in the next fiscal year.

Some lawmakers say the fiscal windfall represents an opportunity for New Mexico to change course and avoid the big swings between spending growth and cuts that have been common over the past decade. However, other lawmakers and senior budget officials have warned that recent revenue growth is unlikely to be sustainable in the long term.

Rep. Patricia Lundstrom, a Gallup Democrat who chairs the committee, said year-over-year spending growth should be kept in line with the state’s annual average over the past decade.

State spending has already increased by around 30% over the past three years. Democratic Governor Michelle Lujan Grisham, who is running for re-election, signed an $8.5 billion spending plan this year that included increases for teachers and state police officers and tax refunds for state residents.

This latest revenue boost could cause a feeding frenzy in a state with high Medicaid enrollment levels, roads and bridges in need of repairs and a public school system that for years has been one of the worst in the world. country.

Sen. George Muñoz, also from Gallup and chairman of the Senate Finance Committee, said the top priority should be revamping the state’s fiscal structure.

“If we really want to change, once and for all, and deliver on our commitment to lower tax rates, lower (gross receipts tax, and) make New Mexico competitive with other states, c It’s one of the biggest opportunities we could have,” he said.

The state is also expected to run a budget surplus of nearly $3.8 billion for the current fiscal year, and about $2.6 billion is expected to go into an early childhood trust fund.

But Finance and Administration Secretary Debbie Romero has warned lawmakers they will have to view supply chain issues, a possible economic downturn and volatility in the global energy market as risks to companies. government revenue forecasts.

Spending growth under Lujan Grisham has drawn criticism from Republican gubernatorial candidate Mark Ronchetti, who said he would push to use excess funds for annual reimbursements and tax cuts if elected.

Lujan Grisham sought to take credit for the record income levels, saying they were the result of his administration’s policies and “the healthy economic climate we foster”.

Oil production concentrated in the state’s corner of the Permian Basin is driving the boom. About two-thirds of projected revenue growth for the next fiscal year is expected to come directly from oil and gas revenues.

Ismael Torres, the committee’s chief economist, said New Mexico was the only state to have returned to pre-pandemic oil production levels. The state is expected to produce 590 million barrels of oil in the current fiscal year.

While oil and gas is New Mexico’s main source of revenue, other sectors are also expected to thrive in the coming fiscal year. Manufacturing, for example, is expected to grow by 41% and economists forecast a 27% increase in leisure and hospitality services.

State economists also noted that inflation pushes up tax revenue collected due to rising costs of food, building materials and other goods and services, as well as taxes on the income of particular linked to wage increases.

For additional copyright information, see the distributor of this article, Albuquerque Journal.