New state budget estimates released today at a meeting of the interim Legislative Finance Committee reveal what the cynics among us already knew: There's no such thing as a miracle cure.

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"We don't have some kind of a rapid recovery in the outlook," LFC Chief Economist Tom Clifford told the meeting. "We're still losing jobs."

Clifford, along with Taxation & Revenue Secretary Designate Dorothy "Duffy" Rodriguez and Finance & Administration Secretary Designate Dannette Burch, spent an hour or so this morning explaining how the state budget is in slightly worse shape than officials thought in July.

The outlook isn't entirely bleak—taken together, general fund revenues are less than 1% lower than expected in July—but aspects of the new estimates are still worrisome. A few bullet points:

- Gross receipts tax (GRT) revenues fell by over 10% in FY10, resulting in a big hit for the sector that makes up roughly 30% of the state's general fund income. (The upside: LFC experts estimate that GRT revenues have "hit bottom" and will start to slowly recover in FY11 and FY12.)

- Declining activity in the construction industry has had a "huge negative effect" on declining GRT. In the past, construction has accounted for approximately 1/6 of the state GRT income—a figure that has since shrunk to 1/12.

- As natural gas and crude oil prices have dipped, so too have production volumes, leading to a $14 million drop in general fund revenues—and a $13.4 million drop in Oil and Gas Emergency School Tax revenues—from the July estimate. Since 2008, oil and gas revenues have fallen from 25% (their peak) to just 15% of the state's general fund.

-The growth in revenue from personal income taxes—which make up approximately 20% of the state's general fund—between FY09 and FY10 is a meager 0.6%. What's surprising (and, frankly, somewhat dubious) is the report's assertion that personal income tax revenue will grow 10.6% in FY11. Hey, I'm all for it—just have to see it to believe it.

(Note: The report does stipulate that a lot is up in the air because agency audits haven't been turned in yet, and also because November will bring a new legislature and governor. Rep. Lucky Varela, D-Santa Fe and the chair of the LFC, recently told SFR he'd advocate for a progressive income tax. If he's successful, that could be where the 10.6% comes from.)

- Remember last year's special budget session that dragged on into the wee hours? It accomplished a little over $460 million in savings. Add transfers from the state's tax reserves to that total, and you get about $633 million—which is great, but still not enough to offset a projected $257.6 million shortfall in FY12. Sigh.

Why the shortfall? Approximately $350 million of the state budget will go to replacing federal stimulus funding for Medicaid and education. Add decreasing revenues to the equation, and you've got what promises to be a legislative session just as frustratingly hamstrung as the last. 

The LFC will meet at the Roundhouse on and off until Friday, hearing appropriation requests and accounting reports from various state agencies. Click HERE for a pdf of the agenda.