A report presented Thursday to the Revenue Stabilization and Tax Policy Interim Committee states New Mexico is continuing to see extensive revenues coming into the state.
According to the latest report by the Legislative Finance Committee, revenues are expected to track about $581 million over the last consensus estimate.
It is largely coming from an increase in wages, oil prices and production, inflation, and employment resulting in higher than expected personal income tax receipts.
LFC Chief Economist Ismael Torres says employment continues to rise and they expect to reach pre-pandemic levels this year which is well ahead of previous estimates.
He says oil and gas production continues to accelerate.
“It’s growing faster than any other state in the country, exceeding North Dakota,” he said. “We’re the second largest oil producing state in the country. (We are) the only state to have recovered to our pre-pandemic levels. Another interesting fact here is that in the last year New Mexico powered more than half the total U.S. production growth in oil and gas.”
Torres says New Mexico’s state revenues are still very closely tied to the oil and gas industries. He says a $1 change in the annual average New Mexico price of oil has about a $48.4 million impact on revenues.
A 10 cent change in the annual average price of natural gas has about a $19.7 million impact and each additional million barrels of oil generates about $6.6 million in severance taxes and federal royalties.
