State economists are telling New Mexico lawmakers that the gravy train of additional revenue coming from oil and gas production is going to slow down tremendously in the next few years.
A forecast released Monday to the Legislative Finance Committee shows another big increase in revenue for fiscal years 23 and 24, but after that the forecast shows the increases will be dropping to around two-percent by December of 2026.
Chief Economist Ismael Torres told lawmakers what is anticipated is that the revenue estimates are expected to return to what had been regarded as normal levels.
“And really we’re seeing that slow down because of the implementation of tax cuts or reductions in tax revenue, lower inflation is certainly taking a toll or playing a part in lower revenue collections,” he said. “Employment markets are weakening after three years of strong employment and demand. Consumer savings are finally depleting after the buildup during the pandemic. Oil prices have weakened and oil production has slowed tremendously from its really remarkable growth over the last several years and all of that is contributing to the slowdown in revenues.
For the first time in three years, the revenue projections from the August to December estimate was lowered by over $51 million dollars, but the annual change is still 19% above last fiscal year.
Finance Committee Chair Senator George Munoz says everyone knew the new money wasn’t going to last forever and he believes we are changing into a new economy.
He says as the state moves forward they need to plan for a budget they can maintain in future years.