NM Short-Term Economic Forecast Improves From Latest Projections


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New Mexico’s financial outlook has improved further.

While revenues are expected to decline further in the fiscal year that begins July 1, the decline will not be as severe as expected in December.

Recurring general fund income for the coming year is now expected to decline by 8.5%, an improvement from the 10.9% decline forecast just two months ago, according to updated income projections presented Wednesday at the Senate finance committee.

“The [fiscal year 2022] recurring general fund income is expected to increase 4.9 percent from [fiscal year 2021], so the good news is… there is $ 339 million in new money, ”Debbie Romero, acting secretary of the State Department of Finance and Administration, told the committee. “That’s up from the $ 160 million we told you about in December.”

While “new money” will allow the state to maintain stable budgets for the agencies, the majority of which cut spending by 4% in June, Romero and others said uncertainty remains.

Other risks to consider range from variants of COVID-19 to executive orders issued by President Joe Biden to address climate change. They include a moratorium on new oil and gas leases on federal lands, which generate more than 54% of the total oil and gas revenue the state receives, as well as a 60-day moratorium on new license approvals. drilling and other regulatory documents.

“Our production estimates would have increased further if these federal decrees had not been enacted,” said Dawn Iglesias, chief economist of the Legislative Finance Committee. “However, due to the uncertainty of these orders and the potential for them to have negative impacts on production, the current consensus estimate is in fact keeping production estimates flat.”

Iglesias said the state estimated an average oil price of around $ 38 a barrel in its December forecast.

“We’re currently sitting at around $ 60 a barrel,” she said.

Romero said the ongoing battle against the coronavirus pandemic could affect the state’s revenue situation.

“We just don’t know what the COVID variants are and whether vaccines will continue to be effective against these variants,” which could weaken consumer confidence, she said.

Romero said the state was concerned about a delay or a smaller-than-expected federal stimulus package. In total, New Mexico is expected to receive about $ 2.5 billion: $ 1.6 billion directly to the state and $ 841 million to local governments.

“The current proposed legislation makes distributions to state and local governments and allows funds to be used to cover lost income, which the previous stimulus did not allow,” she said.

Another area of ​​concern is fluctuations in the oil and gas market, which generates about 32% of the state’s revenue.

“We still consider the possible negative downturn in the oil industry,” wrote Henry Valdez, spokesman for the Ministry of Finance and Administration, in an e-mail. “That is why we must maintain high reserves for the state budget in order to compensate for possible variations in supply and demand.”

Despite the uncertainty, at least one lawmaker has expressed a sigh of relief with the updated revenue forecast.

“This is great news given the circumstances we find ourselves in,” said Nancy Rodriguez, D-Santa Fe.

Tax and Revenue Secretary Stephanie Schardin Clarke said New Mexico was about 2% behind the U.S. unemployment rate.

“For the entire economy of New Mexico, we have lost approximately 65,000 jobs from the previous year,” she said. “Unsurprisingly, the greatest number of job losses are concentrated in the leisure and hospitality industries.

Mining has lost 7,200 jobs, she said.

While New Mexico has an unemployment rate of 8.2% compared to the national rate of 6.2%, Schardin Clarke said the state’s jobless number is expected to improve faster than expected in December. .

“Moody’s [a national bond credit rating company] Now expects us to return to our pre-pandemic employment level about two years earlier than expected just two months ago, ”she said.

Follow Daniel J. Chacón on Twitter @danieljchacon.

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