NEW MEXICO (KRQE) – Despite economic uncertainty, experts say that the state is experiencing an increase in revenue. In fact, the latest numbers indicate there was more cash flowing into the state than anticipated. Jennifer Faubion, senior economist for the Legislative Finance Committee, said, “We’re in a really, really good position in case of a serious downturn.”
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Earlier this summer, the Legislative Finance Committee released its latest report. It revealed that in February, the state generated $200 million more than expected. Much of this funding came from taxpayers within the state. “Consumer spending is really driving a lot of the gross receipts tax and personal income tax,” Faubion added.
While oil and gas and federal mineral leasing royalties still account for the largest portion of revenue, there is a cap on how much of that money the state can spend. “So essentially what they did was they said anything over FY24 levels, we’re going to put into some different trust funds,” Faubion said.
This cap means that the additional funds from oil and gas will go to the Early Childhood Trust Fund, the Tax Stabilization Reserve, and the Severance Tax Permanent Fund. Though oil and gas collections are down by $9.1 million compared to last year, the state still boasts a healthy economy and a backup plan. If oil and gas revenues decline, capital outlay would be reduced to make up the difference. “So, if oil and gas kind of, if we do hit that really detrimental scenario, 60% of the revenue loss would hit those other funds first before hitting the general fund. So, our operating budgets are pretty well insulated from really any downturn,” Faubion said.
The next report will be released in the coming weeks and will take into account the effects of the latest federal cuts on state funding.
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