The biggest economic issue facing New Mexico these days is budget uncertainty, especially declining revenues due to the price of oil being lower than in the recent past. It is worth noting that a barrel of oil is now above $48 for the first time in 7 months. Nonetheless, New Mexico’s oil producers are still dealing with the rapidly-changing market and a great deal of uncertainty (both from the market and from Washington). That all impacts how much oil is actually produced and sold in New Mexico which in turn impacts state revenues.
The following story which I haven’t seen anywhere else was run in the Albuquerque Journal on Thursday, May 12. It states that state revenues are down by 10% for the first 7 months of 2016. With a $6.2 billion annual general fund budget, that puts New Mexico short by about $620 million. Rainy day funds can help temporarily, but with the cost of Medicaid expansion growing rapidly, New Mexico’s elected leadership faces some real challenges (and tough decisions) sooner than later.