This week, Intel announced it would hire 300 more employees. Those new hires would bring the number of employees at its massive Rio Rancho plant to around 1,500, well below the peak of nearly 7,000 employees, decades ago. Economic Development Department Secretary Alicia J. Keyes called it “good news” as the state tries to diversify its economy. Diversifying the economy has been a rallying cry for years, as the state has increasingly been reliant on oil and gas money to balance the state budget. If the most recent Legislative Finance Committee hearing last week is any indication, those efforts are still a work in progress.
The Roundhouse, January 2011: Flanked by colorful bouquets, a pink and white corsage pinned to her dark blue suit, Gov. Susana Martinez invoked the blossoming of a new era for New Mexico in her first State of the State address. She was the nation’s first Latina governor, soon to be named one of Time magazine’s 100 most influential people. She had a plan for New Mexico and intended to execute it with a prosecutor’s precision. Her message: New Mexico was in a state of financial crisis. “No more shell games,” she announced to applause.
RED RIVER — The state is facing a big hole when it comes to the state budget, lawmakers were told at the latest meeting of the interim Legislative Finance Committee. The projected $325 million deficit for the current year’s budget comes in part because state revenue projections from January were off by more than half a billion dollars. A larger-than-expected downturn in the oil and gas industry made a big part of the decline. This year, the state House of Representatives passed a budget based on the January projections, but the state Senate drastically slashed that budget before sending it back to the House. But even the big cuts in the final budget for this year leave a lot to be done.
Legislators were told by the Legislative Finance Committee director Monday that the budget situation is still dire. “We’re on fumes,” LFC Director David Abbey told the Revenue Stabilization and Tax Policy Interim Committee. The legislators will have to deal with revenue that is down ten percent from last year, Abbey said. The state predicted a five percent drop in revenue. Abbey said a special session may be needed to address any shortfall.
Oil prices are tracking with the January projections but many other indicators show potential trouble for New Mexico’s budget situation. That was the news from Monday’s meeting of the Legislative Finance Committee, the first such meeting since the end of the legislative session. Taxation and Revenue Department officials were quick to mention that this was not another projection, but rather a review of January predictions. The January projections had a sharp reduction in prices from previous estimates and resulted in a lean budget that relied on tapping reserves and sweeping money from various funds with the hopes that future revenues would be able to fill those holes. Oil and gas
While oil saw the glimmer of good news with prices, the dropping drilling activity and even a winter storm put a damper on that news.