(Shelby Kleinhans for Source NM)
The state’s public school system could see a windfall of money as economists expect the local economy to partially recover from the economic downturn caused by COVID-19.
New Mexico’s main pot of money, called the general fund, will total $8.8 billion in the upcoming year. State lawmakers will have $1.39 billion in “new money,” or money that they can spend that they didn’t have in the previous year’s budget.
Stephanie Schardin Clarke, secretary of the state’s Taxation and Revenue Department, and Debbie Romero, secretary of the Department of Finance and Administration, presented the revenue outlook to a legislative panel on Aug. 30.
A large portion of New Mexico’s economy and its school system’s revenue are reliant on the oil and gas industry. The state accounts for 13% of all oil procured in the lower 48 states, and Rystad Energy, an energy research company, expects this to increase to as much as 15.5% by late 2023.
New Mexico oil prices are expected to increase in the next two years, according to the revenue outlook.
Gross receipts taxes, which are applied to a company’s gross sales, are the other major source of revenue for state and local governments here. They have grown 9.8% over the last year.
The amount of goods and services produced in the state increased 4.5% in the first quarter of this year. Moody’s Analytics expects that growth to get even faster over the course of the year.
The revenue estimates come from a group of 10 economists from four different agencies across state government. The forecast assumes that the infrastructure deal passed by the U.S. Senate passes the House in its current form.
The forecasts come with a caveat: The number of COVID-19 infections is rising because of the delta variant.
Moody’s Analytics said there are two economic risks associated with the delta variant of COVID-19: it could delay schools reopening or make classes virtual, postponing the return of many to the labor force, and it could lead to tighter state restrictions and magnify supply-chain issues with surging cases in the Asia-Pacific region.
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