The oil boom continues to roll, and thanks in large part to the funds, the latest projection finds New Mexico will have nearly over $900 million in “new money” next year. That’s what the Legislative Finance Committee was told at a hearing Wednesday. The latest projections show that, buoyed by the oil and gas revenue, the state could see $907 million in excess of what it spent in this year’s budget, the second straight year with massive budget surpluses.
The increased revenues gives legislators more money to budget for increased spending in areas like education, healthcare and infrastructure and to add to reserves to guard against future economic slowdowns. Slowdowns could come because of the boom and bust nature of the oil and gas industry, which is over 40 percent of the state’s revenue. And there are some fears that the ongoing trade war with China and other international economic activities could lead to a global recession.
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 New Mexico Senate and House of Representatives appeared to have an agreement on a $7 billion state budget late Friday after ironing out differences over pay for educators, funding for roads and college athletics. In the end, the biggest sticking point turned out to be a tiny but politically fraught piece of the spending plan: $700,000 for legislators to hire additional staff. The House passed the budget Feb. 21 and the Senate approved a series of changes on Wednesday. But the House did not accept those changes, spurring a round of negotiations between members of the budget committees in both chambers in an effort to reach consensus before the legislative session ends at noon Saturday.
A Senate committee rolled back proposed tax increases in a sprawling bill that would change rates on internet sales, car purchases, e-cigarettes and more. House Bill 6 represented a push by top Democrats in the House of Representatives to shore up the state’s finances, which now rest largely on revenue from oil and gas. But it prompted plenty of skepticism for threatening to raise taxes for many New Mexicans at a time when the state enjoys a hefty budget surplus from an energy boom. The big question now is when the bill will get a hearing in its next and last committee as the Legislature hurtles toward a noon Saturday adjournment. If the Senate Finance Committee doesn’t act on the measure until Friday, House Democrats may be left with little time to negotiate and have to choose between either accepting the Senate’s changes or nothing.
The New Mexico House of Representatives rejected the Senate’s proposed budget on Wednesday, raising objections related to teacher pay, road funding and the pension plan for public employees. The differences are not insurmountable, leaders in both chambers insisted, but they delayed final action on a whopping $7 billion spending plan. The Senate approved its version earlier in the day with a vote of 39 to 2. But the House voted overwhelmingly against that budget, leaving some questions over how to divvy up appropriations as the state increases spending by 11 percent over the current fiscal year, with big boosts in funding to schools, infrastructure and child services. “This isn’t war or anything,” said Rep. Patricia Lundstrom, a Democrat from Gallup who chairs the House Appropriations and Finance Committee.
A key Senate committee on Monday unveiled 123 different changes to a $7 billion state budget approved by the House of Representatives, tweaking proposed raises for school teachers, funding for a marquee economic development program and plans to bring back soccer at the University of New Mexico. The budget would mark an 11 percent increase over the current year’s spending plan as New Mexico enjoys a windfall of tax revenue from an oil and gas boom and as the new Democratic governor, Michelle Lujan Grisham, sets out an agenda that includes big education funding increases as well as filling vacant positions across state government after years of budget cuts. The House approved the budget mostly along party lines last month, sending it to the Senate, where the Senate Finance Committee on Monday added about $19 million in spending to the plan and rearranged other expenses. The changes include more than trebling funding for an economic development program to $60 million from $14 million. The Local Economic Development Act allows the state to pay for brick-and-mortar upgrades such as roads and utility connections as well as other costs associated with setting up businesses to the state.
Republicans in the House of Representatives want to use some of the state’s budget surplus to give every New Mexican $200. These rebates are part of a $6.6 billion budget that GOP lawmakers are putting forward as an alternative to a spending plan sponsored by Democrats and headed for a vote in the House as soon as Thursday night. The House Republican plan would still increase the state budget, but by 5 percent instead of the 11 percent boost in spending included in House Bill 2 and related legislation. New Mexico is in the midst of a windfall from an oil and gas boom, but GOP lawmakers caution that using too much of that money will only lead to tax increases or cuts in future years when the boom goes bust. The Republican proposal is a long shot in the House, where the party holds only 24 of 70 seats.
Top lawmakers on Monday rolled out a proposed $7 billion state budget that would include a whopping $600 million for public works projects around New Mexico as the government’s coffers swell with a windfall of revenue from an oil and gas boom. The Legislative Finance Committee’s proposed budget would mark almost an 11 percent increase in spending by the state. That is less than what Gov. Michelle Lujan Grisham has proposed in her own version of the state budget, which would raise spending by about 13 percent. But as lawmakers prepared to convene Tuesday for a 60-day legislative session, leaders indicated they are not far off from an agreement with the new governor when it comes to some spending on the issue that is sure to dominate the agenda: education. Faced not only with a judge’s order to come up with ways of improving education for many of the state’s most vulnerable students but also with a bright financial outlook in the short-term, legislators echoed Lujan Grisham’s own call to greatly increase funding for New Mexico schools.
Analysts told lawmakers projections show New Mexico will have $1.1 billion in “new money” to spend compared to last year. But they also urged caution on how to spend that money, given the state’s reliance on volatile oil and gas revenues and the need to replace the money legislators used money from various state programs in recent years. Members of the Legislative Finance Committee, which hears regular budget updates throughout the year, were briefed on the numbers from their chief economist and members of outgoing Gov. Susana Martinez’s cabinet. The sky-high budget numbers were slightly lower than the August forecast, but still much higher than the state has seen since 2005, before the Great Recession of the late 2000s. The budget boom doesn’t necessarily mean that legislators will fund new recurring programs.
Committee chairwoman, and House Appropriations and Finance Committee chairwoman, Patty Lundstrom, outlined in the most-recent LFC newsletter where the money would likely go.
An oil and gas bonanza in Southwestern states may be helping to drive the continuing national economic boom. The nation’s 4.2 percent growth in GDP, estimated last month by the Bureau of Economic Analysis, is the highest quarterly growth since 2014. State estimates aren’t due until mid-November, but many experts see oil and natural gas drilling, driven by higher prices, as a leading reason. “The states that contribute most might be the ones with strong increases in energy production,” including Texas, New Mexico and Colorado, said Mark Perry, an economist at the University of Michigan and an economic analyst for the conservative-leaning American Enterprise Institute. GDP measures gross domestic product, or the value of all goods and services produced in a given period of time.