The state received good news in August when financial experts forecast nearly $ 1.4 billion in new money for the next fiscal year.
Lawmakers were told on Monday that there was a cherry – or maybe 28 to 33 million of them – on top of that good fortune.
The state’s top tax official and the Legislative Assembly’s chief economist told a panel of lawmakers the state’s revenues will likely exceed already strong expectations of at least $ 28 million, and possibly up to $ 33 million, for the fiscal year starting July 2022.
The money, generated largely by revenues from the production of oil and natural gas – which in turn bolsters income taxes, rents and royalties – has implications for the public finances of schools, schools and communities. subsidies for health care, salaries of public workers, public security and other public services.
“The good news is that we are getting closer to the upside. … Jobs, wages and salaries, these things are recovering, ”Ismael Torres, chief economist in the Legislative Assembly’s Budget and Accountability office, told members of the Income and Income Stabilization Commission. tax revenues.
A spokeswoman for Governor Michelle Lujan Grisham wrote in an email that her office was “encouraged” by the forecast.
Spokeswoman Nora Meyers Sackett noted that the funds can be invested in “policies and programs that will benefit students, workers, families, businesses and communities large and small across the state.”
Committee members received the good news financial report about two months before they were called to a regular legislative session focused on the state budget. A special session on redistribution is expected to open in December.
Monday’s report cites encouraging data showing the state’s oil production hit a record high of over 43 million barrels in August.
The report says the state’s economic recovery from the coronavirus pandemic was “strong” from June to August.
State revenues are expected to increase 9% to $ 8.84 billion for the fiscal year beginning July 1, 2022, from $ 8.1 billion for the current fiscal year.
But not all the news was positive. Tax and Revenue Secretary Stephanie Schardin Clarke said the economic recovery has been limited for working poor and less educated. She underscored the continued importance of financial safety net programs.
“Low-wage workers who probably had the least savings before the pandemic still suffered a loss of wages of around 5%,” she said.
Changes to the state tax code that favor low-income households are for the first time eating into the state’s general fund budget.
Earlier this year, lawmakers expanded the state’s working family tax credit and the block tax refund for low-income people. Early estimates showed the state would forgo around $ 74 million in annual revenue as a result.
And despite the gains in the employment sector, the report says it could take until the end of 2022 for the state’s unemployment rate – 6.9% in September – to fall below pre-pandemic levels. New Mexico lost about 104,000 jobs during the height of the pandemic, and it could take until 2026 to reach pre-pandemic employment levels, according to the report.
The report warns of the recent increase in COVID-19 cases, as well as the fact that “the churn rate of the labor market is intensifying”, among other factors, could have a negative impact on potential growth.
The Associated Press contributed to this report.