When it comes to New Mexico’s finances, everything seems to have changed and also stayed mostly the same.
Gov. Susana Martinez on Wednesday touted new data showing a 13 percent increase in tax revenue over the previous fiscal year, totaling $672 million — a boon after financial crises in recent years that spurred rounds of budget cuts.
But while the Republican governor, who is in the last year of her term, used the numbers to tout the state’s long-straggling economy, legislative economists cautioned much of the growth seems to have come from production of oil and gas, reflecting the state’s continued reliance on the volatile commodity.
The uptick included personal income tax revenue growth of about 18 percent, or more than $50 million, and corporate income tax growth of more than 66 percent, or $18 million, as well as an 11 percent increase in gross receipts tax.
Martinez offered the data as vindicating her decision to veto more than $1 billion in tax increases throughout her tenure.
“Results like these — a growing and diversifying economy, increased tax revenue, and more — show why it is so important to keep fighting to make our state more competitive for jobs and investment,” she said in a statement.
But the Legislative Finance Committee issued a statement noting the number Martinez cited includes not just the state’s share of tax revenue but local tax revenue, too — including funds raised through increased county and municipal taxes.
Some communities have increased gross receipts taxes over the last year, including Santa Fe County.
While New Mexico has seen some positive economic news lately with the number of people working in the state returning toward prerecession levels, the committee also noted the majority of the growth in state revenue — about 70 percent — appears to come from oil and gas production.
“The LFC revenue forecast in January noted the state’s revenue growth in some ways is more tied to the oil and gas industry now than at any time in history,” the statement said.
Senate Finance Committee Chairman John Arthur Smith, D-Deming, said the numbers Martinez touted were old news as the energy sector has boomed in southeastern New Mexico’s share of the Permian Basin.
Instead, he said, the numbers indicate New Mexico is “back on the oil and gas roller coaster,” arguing the state has not diversified its economy.
“I didn’t realize everything was so wonderful,” he remarked dryly about the governor’s announcement.
Moreover, policymakers have warned the state could take some big financial hits in the coming year, with taxpayers contesting as much as a half-billion dollars in payments and a court weighing whether New Mexico adequately funds public schools.
“There are a lot of downside risks we are worried about,” Legislative Finance Committee Director David Abbey told lawmakers last month.
The committee’s members, which include legislators from both the Senate and House of Representatives, will get an update on the state’s financial outlook from economists in the coming months. Those numbers, rather than the figure the governor released Wednesday, will serve as the main guide in the process of piecing together a state budget for the fiscal year that begins in July 2019.
Still, the uptick is indicative of a state that is for now on better financial footing than it was just a year ago.
The budget lawmakers approved earlier this year will increase funding for education and public safety. It will also increase pay for state employees as well as teachers while also boosting New Mexico’s depleted financial reserves.
Contact Andrew Oxford at 505-986-3093 or firstname.lastname@example.org. Follow him on Twitter @andrewboxford.