On Monday, the NM Legislative Finance Committee released its Consensus Revenue Estimate for fiscal year 2024 which begins July 1, 2023.
The projected revenue for FY 2024 is $11.994 billion. Legislators will craft a budget based on these numbers in the upcoming legislative session that starts in January, including how much to include in reserves for any possible future budget shortfall.
“The December forecast indicates New Mexico is still in a solid position fiscally,” Taxation and Revenue Secretary Stephanie Schardin Clarke said. “The strong revenues we’ve seen over the past couple of years allowed us to deliver significant tax relief to New Mexicans and still maintain historically high reserves to protect against unforeseen shocks.”
New Mexico’s revenue for FY 2022 was $9.675 billion which was up by $1.59 billion or 19.7 percent from FY 2021.
“Revenue strength is the result of sustained high inflation raising expectations for gross receipts tax and income tax collections,” the report states.
Other reasons for the high revenue estimate include high consumer spending, wage growth and oils and gas revenues.
“Oil and gas revenue strength is pushing severance tax and federal royalty collections higher above their five-year averages, resulting in larger transfers to the early childhood trust fund than was expected in August and boosting the amount reaching the general fund throughout the forecast horizon,” according to the analysis.
The Early Childhood Education and Care Fund was established in February 2020 and is managed by the New Mexico State Investment Council.
Estimated FY22 revenues are expected to be $1.16 billion more than FY22 appropriations, the report states. This includes $1.069 billion in federal stimulus funds and $902.9 million in nonrecurring legislative expenditures.
Non-American Rescue Plan general funds revenues exceeded General Fund appropriations by $706.5 million.
These funds are expected to be transferred to the operating reserve and the tax stabilization reserve fund, the report states.
“Ending reserve balances for FY22 are estimated at $3.68 billion, or 49.3 percent of recurring appropriations,” the report states.” Because total reserve balances exceed 25 percent of recurring appropriations, the excess of the five-year average of oil and gas school tax collections –$1.34 billion – will be deposited into the early childhood education and care trust fund instead of the tax stabilization reserve.”