Another unprecedented oil surplus: will Santa Fe blow it again?

On the heels of a massive $3.6 billion surplus which was available to the Legislature and Gov. Lujan Grisham in advance of the 2023 session, analysts are now predicting another banner budget year for New Mexico. The current surplus is estimated at $3.5 billion.

Of course, this number is all the more impressive because New Mexico government has grown rapidly in recent years (meaning more money is needed to fulfill the baseline). In addition to growing general fund spending, the State has also plowed money into various permanent funds and endowments (deferred spending).

There have been minor GRT rate reductions (in 2022) and elimination of GRT on medical deductibles and co-pays, but the Legislature also seriously considered tax hikes in the last session. Nothing fundamental has been done to improve or diversify New Mexico’s economy for the long-term.

Can this Legislature and Gov. enact needed tax reductions and reforms? We remain in a Show-me state of mind, but will keep pushing and fighting. By all accounts the Legislature will again have record revenues when it convenes in January thanks to the production-driven oil boom in New Mexico.