March 9, 2017

NM’s revenue still hasn’t recovered from pre-recession high

No one following the legislative session and debate over the state budget will be surprised that New Mexico still isn’t back to peak, pre-recession levels on tax revenue.

New Mexico is one of 13 states that still haven’t reached the pre-recession levels of tax revenue collection.

The findings come from ongoing reports by the Pew Charitable Trusts of the most recently-available tax revenue data from states. All numbers are adjusted for inflation.

New Mexico is one of 32 states that didn’t collect as much tax revenue in the most recently-available data since the recession. The numbers are from the second quarter (April through June) of 2016.

New Mexico’s revenue was 12.6 percent lower than its pre-recession peak in the 4th quarter of 2016.

Pew Charitable Trusts

The change in tax revenue in New Mexico (orange) and the United States (blue) since 2006.

New Mexico’s neighbors also fell short of their pre-recession revenue peak. Arizona remained 3.5 percent behind in tax collections, when compared to its pre-recession peak, and Utah was 1.3 percent behind.

Meanwhile,Texas’ tax collections were 4.3 percent higher than the pre-recession peak. Colorado’s collections were 19.9 percent higher than the state’s pre-recession peak.

New Mexico’s tax revenue ticked downward in the second quarter of 2016, like all ten of the top oil-producing states (which includes neighboring Colorado and Texas). Texas and North Dakota were also further impacted by tax cuts that went into effect, per the Pew report.

Not only did New Mexico’s tax revenue tick down in the second quarter of 2016, the state was one of six states with a full year of declining tax revenue. Again, states that rely on energy production made up most of the list (North Dakota, Oklahoma, Texas and West Virginia joined Illinois).

The closest New Mexico has come to matching peak pre-recession revenues was in the 1st Quarter of 2015, when revenues were just 1.1 percent behind the pace. That has dropped precipitously in the 15 months covered by the report to the 12.6 percent below the pre-recession peak.

This is the worst since the 2nd quarter of 2013, when New Mexico’s revenues were 22.5 percent off the peak pre-recession numbers. The worst came in the 1st quarter of 2010, when New Mexico’s revenues were 29.8 percent below the peak.

Still, New Mexico is better off than some other energy-dependent states. Oklahoma is 15.1 percent from its pre-recession revenue peak, Louisiana is 19.1 percent off of its pre-recession revenue peak, Wyoming is 31.1 percent off of its pre-recession revenue peak and Alaska is 93.9 percent off of its pre-recession revenue peak. The only other state besides these to be down more than 15 percent from previous peaks is Florida, at -17.7 percent.

“Without personal income or general sales taxes, Alaska is highly dependent on oil-related severance tax revenue, which began falling even before worldwide crude prices declined in 2014 as its oil production waned,” Pew wrote of the country’s largest state.