New Mexico’s permanent fund investments are expected to surpass oil and gas revenue by 2039, according to the Consensus Revenue Estimating Group, or CREG.
Permanent funds in New Mexico were established to ensure the state continues receiving benefits from oil, natural gas and other nonrenewable resources beyond the life of the resource.
CREG presented a long-term revenue outlook to the Legislative Finance Committee Tuesday.
“For years, we’ve talked about the need to diversify the state’s revenue stream to ensure that we can continue to deliver the level of services New Mexicans deserve. We’ve made incredible progress,” New Mexico Taxation and Revenue Secretary Stephanie Schardin Clarke said in a press release.
The legislature allocated $475 million to the Severance Tax Permanent Fund during the 2023 legislative session. The fund plans to reach $1 billion by 2033 and contribute $92 million annually, the press release stated.
“In FY25, the permanent funds will distribute more than $2 billion to the general fund and other public entities and programs. By the decade’s end, the state will deposit an estimated $4.7 billion into this fund,” the press release states.
New Mexico’s main investments funds are the Land Grant Permanent Fund with a current balance of $31.897 billion, the Severance Tax Permanent Fund with a $9.836 billion balance, the Tax Stabilization Reserve Fund with a $2.191 billion balance and the Early Childhood Education and Care Fund with a $7 billion balance.
Including all permanent funds, New Mexico has $53.407 billion in total savings and still “has the opportunity to invest in our permanent funds in the 2025 Legislative Session to accelerate the growth of our return,” the press release stated.
While long-term forecasting is important, it should not be relied upon overtly due to the uncertainty of predicting the future, the press release states.
“Thanks to our strategic investments in the state’s permanent funds and endowments, New Mexicans will continue to benefit from strong public programs such as early childhood education and the Opportunity Scholarship,” Gov. Michelle Lujan Grisham said in the press release. “We’re securing long-term prosperity and moving toward a more resilient and diversified revenue base that will pay dividends for generations to come.”
The CREG is made up of economists from the Departments of Finance and Administration, Taxation and Revenue, Transportation and the Legislative Finance Committee.
