The Rio Grande Foundation has been at the forefront of efforts to put the government employee pension problem on the agenda. Look for writings by “Scott Moody” in the search box on our website. It is a good thing we’re on the ball because the more data that comes out on this, the worse New Mexico’s pension problems look.
For starters, there is a new study which Capitol Report New Mexico has written on showing that New Mexico’s pension plan for state employees will run out of money in the year 2023.
Among the other findings of the report are that New Mexico will be expected to pay out $2.6 billion in state employee pensions in 2024.
That $2.6 billion figure represents an estimated 46 percent of the entire state tax revenue for a given year
In other words, if the Rauh/Novy-Marx model holds true, in less than 15 years, New Mexico will have pension obligations that equal nearly one-half of the state’s entire annual intake of taxes.
To put New Mexico’s pension issues in perspective, a table I found (displayed below) from Moody and Warcholik shows that New Mexico’s maximum pension liabilities as a percentage of state GDP is third-highest in the nation: