In a significant development for the state of New Mexico, efforts to save and invest portions of a financial windfall from local oil production are proving to be successful. According to a new forecast released on Monday, state government income from investments has surpassed personal income tax collections for the first time. This achievement is a testament to the prudent financial planning and strategic decision-making by state officials.
The forecast predicts that general fund income from the state’s two multibillion-dollar permanent funds and interest on treasury accounts is expected to reach $2.1 billion for the fiscal year between July 2024 and June 2025. This surpasses the $2 billion in revenue generated from personal income taxes during the same period. The investment earnings are crucial in ensuring the sustainability of critical programs such as childcare subsidies, tuition-free college, and trade school education, especially in the event of a decline in oil income due to a potential transition to new energy sources.
State Senator George Muñoz of Gallup highlighted the positive impact of these investments, stating, “We’re not a poor state anymore. We’ve got things that we can win on – free education, childcare, low taxes for working families, for children. And that’s all because we’ve done a lot of the work to set this up for the future.”
The announcement of the income estimate for the upcoming year was made at a legislative panel where economists from four government agencies presented their findings. These figures serve as the baseline for budget negotiations when the Democratic-led Legislature convenes in January. State government income, closely tied to oil production in New Mexico, continues to grow, albeit at a slower pace, as legislators consider new investments in social programs aimed at addressing issues like crime and homelessness.
Economists project that the state will generate a record-setting $13.6 billion in general fund income for the fiscal year spanning from July 2025 to June 2026, representing a 2.6% increase over the current period. This increase in income allows for an additional $892 million in state spending in the upcoming fiscal year, a 7% rise, according to the Legislature’s accountability and budgeting office. State income is expected to exceed current annual spending obligations by $3.4 billion, providing room for further investments.
New Mexico legislators are actively working towards opening new savings accounts to allocate funds for specific purposes. One proposal aims to set aside up to $1 billion in a trust to support spending on mental health and addiction treatment, addressing public concerns regarding crime and homelessness. Additionally, legislators are likely to revisit a proposal to create a trust for Native American education, with a focus on expanding Indigenous language instruction.
Overall, the financial forecast for New Mexico paints a positive picture of the state’s economic outlook, showcasing the benefits of strategic investments and prudent financial planning. As the state continues to diversify its revenue sources and prioritize critical programs, it is poised for sustained growth and prosperity in the years to come.
