It's clear now that New Mexico closed the fiscal year on June 30 with a massive budget shortfall, even though the state isn't sure how big the final gap will be.
Current estimates based on new reports from legislative money watchers show a shortfall of more than $150 million as tax revenues have failed to meet previous estimates, likely necessitating a complete draining of the state's reserve funds, said a top official Thursday at a Roundhouse press conference.
The news means that revenue for the current fiscal year, which began this month, also appears likely to fall short of February projection by $300 to $500 million, leaving the approved spending plan for the next 12 months with a huge gap.
Yet calls for a special session from Legislative Finance Committee chairman Sen. John Arthur Smith (D-Deming) to rebalance the budget for fiscal year 2016 haven't elicited a response from the governor, the only official with the power to call lawmakers back to work before the end of the year.
"If you want to be responsible, it better be soon," he said to a room of reporters.
Asked whether Gov. Susana Martinez plans to convene a special session, spokesperson Michael Lonergan tells SFR, "As she has done since day one, the governor is happy to discuss the state's budget outlook with legislative leaders, but will insist that we move forward in a cautious, diligent, and responsible way that protects New Mexico's taxpayers."
A report distributed at the press conference suggests that covering an estimated $150 million budget gap will dry up New Mexico's operating reserves, forcing lawmakers to tap into a $200 million tobacco settlement piggybank.
Meanwhile, Sen. Stuart Ingle, the Republican who serves as minority floor leader, says it's still too early to make that decision, pointing to some May and June revenue sources that still have not been tallied. Should the Legislature meet before the end of the year, however, Ingle says nothing would be off the table.
Through May of this fiscal year, the state collected about $490 million—about 9.7 percent less revenue than it did during the same period last year. Martinez in February signed a $6.2 billion budget that cut overall spending for the first time in five years. Although most departments saw cuts or remained steady, the plan increased spending in education and public safety. It forecast a 5.5 percent revenue reduction attributable to a sagging global oil market.
According to the new reports, gross receipt tax revenue, which makes up about 35 percent of the state’s general fund, fell $131 million, a 7.5 percent decrease from the same period last year. Corporate income tax revenue fell from $208.6 million to $96 million. Both sources fell well short of February projections.
David Abbey, staff director of the Legislative Finance Committee, says the downfalls are likely ripple effects from a slump in the global non-renewable energy market. Although the price of crude oil per barrel saw a rebound in recent weeks, overall oil production and earnings fell precipitously.
Mining, oil and gas revenue in New Mexico fell significantly, dropping 31.4 percent over the last fiscal year. The state last week had 25 active oil rigs, exactly 50 percent fewer than it did in July 2015. That’s even an improvement from May, when the average active rig count was 18.
New Mexico is particularly reliant on non-renewable energy for revenue. It is one of eight states where oil, natural gas and mining make up 10 percent or more of gross domestic product, according to a study by the Rockefeller Institute of Government, a think tank run out of the State University of New York.