New Mexico’s revenue from oil and gas will come up short, officials say
Officials in the Martinez administration announced Tuesday that revenue for the state government will be lower than previously estimated. The Associated Press reports:
A new revenue forecast released Tuesday lowered projections for tax collections by $123 million in the fiscal year that starts next July and about $21 million in the current budget year.
Much of the decline is because economists expect oil and natural gas prices to be lower than anticipated.
Last week, Gov. Susana Martinez (R) was in Midland, Texas, touting her anti-regulation record to the annual meeting of the Permian Basin Petroleum Association. She told the crowd that oil and gas revenue makes up about 30 percent of the state’s general fund and 95 percent of the permanent fund, and yet, “Often, the industry is vilified, vilified even in our state.”
But the new depressed revenue figures suggests there are weaknesses to a state relying on oil and gas revenue to finance itself. Although economists say increased economic growth leads to spiking fuel prices, the Federal Reserve’s commitment to tamping down on rising headline inflation, a measure of inflation that includes energy and food prices, means that states like New Mexico must exist in an unpredictable budgetary situation.
The Legislative Finance Committee was told in July they had around $350 million in “new money” to use in the next legislative session. The decreased oil and gas revenue means only $200 million will now be available.