New Mexico revenue remains very strong (but explosive growth can’t go on forever)
New Mexico’s revenue boom driven by growth in the Permian Basin oil and gas production is not coming to an end, but it is slowing a bit. Combined with massive spending growth (80 percent since 2019) and a decline in the price of oil, some legislators are feeling budgetary constraint that they haven’t felt much in the last decade:
Rep. Derrick Lente, D-Sandia Pueblo (the powerful chair of House Tax Committee), said it’s unlikely lawmakers will approve a package of tax cuts or other tax code changes during the 30-day session due to the state’s revenue situation. “While we’ve done a great job, maybe this is not the year to have a tax package discussion,” Lente said.
What kind of job he and the other legislators have done with New Mexico’s finances is up for debate (we don’t share Lente’s view), but with so little emphasis on returning money to taxpayers and diversifying New Mexico’s economy in the BEST years, it is hardly a surprise they don’t see much being done in VERY GOOD years like the one to come.
Will the Legislature’s scarcity mindset result in newfound fiscal restraint? With spending having already grown by 80% under Gov. Lujan Grisham spending growth has already slowed a bit in recent years. Even if the money is not spent it will simply be set aside in the state’s massive and fast-growing sovereign wealth fund for future spending.
