New Mexico Economic Development and Revenue Strategy
Summary of Findings
The recent surge in oil and gas revenue is due to a once-in-a-generation confluence of
supply and demand factors that are unlikely to be sustained over time.
Independent analysts suggest that the peak in oil and gas production in New Mexico
could potentially come within the decade.
◆ Recent State revenue trend projections suggest assumptions of continued oil and gas
revenue growth that are inconsistent with historical growth trends and with alternative
scenarios of how price and production relate to changes in State revenue.
◆ If oil and gas revenue projections aren't achieved, it will worsen the structural recurring
revenue deficit resulting in potentially significant outyear budget gaps.
Closing the potential gaps would require unprecedented growth in the State's two other
main sources of revenue – the gross receipts tax and the personal income tax.
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⚫◆ Therefore, utilizing non-recurring revenue to offset cuts to recurring revenue
sources now would leave New Mexico even more vulnerable to the potentially
catastrophic consequences of the next inevitable downturn.
© PFM
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