Albuquerque Journal
State Revenue To Surpass Estimates
By Dan Boyd / Journal Staff Writer
SANTA FE - Robust oil prices and production, primarily in southeastern
New Mexico, will propel state revenue levels to come in roughly $250
million higher than expected for the just-completed fiscal year, based
on preliminary figures.
With possible federal budget cuts and other economic concerns looming,
top-ranking state officials and lawmakers say the extra money likely
will be needed.
"This is proof that New Mexico has a very, very volatile revenue base,"
Finance and Administration Secretary Tom Clifford said Tuesday. "This
doesn't remove our need for caution."
The stronger-than-expected revenues mean the state likely will end up
taking in nearly $5.8 billion for the fiscal year that ended June 30, an
increase of roughly 7 percent - or about $380 million - over the
previous year.
However, figures to be released today by the Department of Finance and
Administration show that about $200 million of the $250 million in
higher-than-expected revenue stems from oil and natural gas taxes and
royalties, which tend to fluctuate from year to year.
Oil and natural gas taxes and royalties currently make up about 16
percent of the state's revenue, even more under some calculations.
Rep. Luciano "Lucky" Varela, D-Santa Fe, vice chairman of the
Legislative Finance Committee, said some of the unexpected money could
be used during the 2013 legislative session to fill shortfalls in state
agency budgets.
"It's a good thing that we do have some extra dollars so we can consider
some of those deficiencies and supplementals," Varela said.
He also warned that the state could face federal budget cuts and may
have to spend more money in order to expand its Medicaid program.
In addition, rank-and-file state employees have not received a pay
increase in three years, and Varela said he is concerned not enough
public employees have been hired under Gov. Susana Martinez's
administration.
Bolster reserves
For now, the additional revenue will be used to bolster the state's
reserves, which are on track to end the fiscal year at about $750
million, or more than 13 percent of recurring state spending, according
to DFA.
That money, which was previously expected to total about $500 million,
can be used as a buffer in case of unanticipated expenses or future
revenue fluctuations.
However, even with more dollars than expected flowing into the state's
coffers during the just-completed fiscal year, New Mexico's incoming
revenue still has not returned to pre-recession levels.
The state took in about $6 billion during the 2008 fiscal year before a
severe economic downturn caused revenue levels to drop by more than $1
billion over a two-year period.
Martinez, who pledged to make state government more effective during her
2010 gubernatorial campaign, said the growth of the state's cash
reserves - which sat at about 5 percent of recurring spending two years
ago - is proof of prudent fiscal oversight.
"We remember where this money comes from and New Mexicans should feel
confident that we're using their tax dollars in the most efficient way
possible," Martinez said in a statement.
Legislative and executive branch economists are expected to release new
state revenue estimates next month. Those estimates will include the
just-completed fiscal year, the current year and future years.
While economic recovery has been slow in most of the state, as reflected
in unemployment figures and a weak housing market, the boom in oil
production in southeastern New Mexico has led to a population increase
in that part of the state.
- This article appeared on page A1 of the Albuquerque Journal
http://www.abqjournal.com/main/2012/07/11/news/state-revenue-to-surpass-
estimates.html
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