New Mexico Economic Development and Revenue Strategy
Current PFM Study: Why This Study is Needed Now
Recent "windfall" revenues from the oil and gas sector have contributed to a
structural imbalance between the State's reliable, recurring sources of general revenue
– primarily personal income taxes and gross receipts taxes - and recurring State
spending.
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◆ The reliance on the oil and gas sector for revenue may also have a negative
economic impact. New Mexico's recent lackluster economic performance and population
stagnation, particularly when compared to neighboring states, may be the result of a
"resource curse" - an economic term describing when reliance on extractive industries
leads to underinvestment in policies needed for long term growth.
If the oil and gas sector declines in the near term, it will create a significant
revenue shortfall and further exacerbate the gap between recurring revenue and State
appropriations. The State's revenue estimates generally reflect an expectation that New
Mexico's oil and gas sector will remain robust for many years. Given market shifts and
historic trends, this assumption is risky.
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